7 CFR Part 1770 Accounting Rqmts for RUS Telecom Borrowers

CFR-title7-vol12-part1770.pdf

Accounting Requirements for RUS Electric and Telecommunications Borrowers

7 CFR Part 1770 Accounting Rqmts for RUS Telecom Borrowers

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Rural Utilities Service, USDA

Pt. 1770

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Each borrower has the flexibility to select its own storage media. The following are required:
(a) The storage media shall have a
life expectancy at least equal to the
applicable retention period provided
for in the master index of records, unless there is a quality transfer from
one media to another with no loss of
data. Each transfer of data from one
media to another shall be verified for
accuracy and documented.
(b) Each borrower shall implement
internal control procedures that assure
the reliability of, and ready access to,
data
stored
on
machine-readable
media. The borrower’s internal control
procedures shall be documented by a
responsible supervisory official.
(c) Records shall be indexed and retained in such a manner that they are
easily accessible.
(d) The borrower shall have the hardware and software available to locate,
identify, and reproduce the records in
readable form without loss of clarity.
(e) At the expiration of the retention
period, the borrower may use any appropriate method to destroy records.
(f) When any records are lost or destroyed before the expiration of the retention period set forth in the master
index, a certified statement shall be
added to the master index listing, as
far as may be determined, the records
lost or destroyed and describing the
circumstances of the premature loss or
destruction.
§ 1767.71 Periods of retention.
(a) Records of Rural Development
borrowers of a kind not listed in the
FERC regulations should be governed
by those applicable to the closest similar records. Financial requirement and
expenditure statements, which are not
specifically covered by FERC regulations, are recommended to be kept for
one year after the ‘‘as of date’’ of Rural
Development’s loan fund and accounting review.
(b) Consumer accounts’ records
should be kept for those years for
which patronage capital has not been
allocated.
(c) Records supporting construction
financed by Rural Development shall
be retained until audited and approved
by Rural Development.

(d) Records related to plant in service
must be retained until the facilities
are permanently removed from utility
service, all removal and restoration activities are completed, and all costs are
retired from the accounting records unless accounting adjustments resulting
from reclassification and original costs
studies have been approved by Rural
Development or other regulatory body
having jurisdiction.
(e) Life and mortality study data for
depreciation purposes must be retained
for 25 years or for 10 years after plant
is retired, whichever is longer.
§§ 1767.72–1767.85

[Reserved]

PART 1770—ACCOUNTING REQUIREMENTS FOR RUS TELECOMMUNICATIONS
BORROWERS
Subpart A—Preservation of Records
Sec.
1770.1 General.
1770.2 Designation of a supervisory official.
1770.3 Index of records.
1770.4 Record storage media.
1770.5 Periods of retention.
1770.6–1770.9 [Reserved]

Subpart B—Uniform System of Accounts
1770.10 General.
1770.11 Accounting system requirements.
1770.12 Supplementary accounts.
1770.13 Accounting requirements.
1770.14 Continuing property records.
1770.15 Supplementary accounts required of
all borrowers.
1770.16 Supplementary accounts required of
nonprofit organizations.
1770.17 Expense matrix.
1770.18–1770.24 [Reserved]
1770.25 Unusual items and contingent liabilities.

Subpart C—Accounting Interpretations
1770.26 General.
1770.27 Definitions.
1770.28–1770.45 [Reserved]
APPENDIX TO SUBPART C—ACCOUNTING METHODS AND PROCEDURES REQUIRED OF ALL
BORROWERS
AUTHORITY: 7 U.S.C. 901 et seq.; 7 U.S.C.
1921 et seq.; Pub. L. 103–354, 108 Stat. 3178 (7
U.S.C. 6941 et seq.).
SOURCE: 55 FR 3388, Feb. 1, 1990, unless otherwise noted.

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§ 1770.1

7 CFR Ch. XVII (1–1–11 Edition)

Subpart A—Preservation of
Records
SOURCE: 70 FR 25755, May 16, 2005, unless
otherwise noted.

§ 1770.1

General.

(a) This subpart establishes RUS polices and procedures for the preservation of records of telecommunications
borrowers.
(b) The regulations prescribed in this
part apply to all books of account, contracts, records, memoranda, documents, papers, and correspondence prepared by or on behalf of the borrower
as well as those which come into its
possession in connection with the acquisition of property by purchase, consolidation, merger, etc.
(c) The regulations prescribed in this
part shall not be construed as excusing
compliance with any other lawful requirements for the preservation of
records.
§ 1770.2 Designation of a supervisory
official.
Each borrower shall designate one or
more officials to supervise the preservation of its records.
§ 1770.3

Index of records.

(a) Each borrower shall maintain a
master index of records. The master
index shall identify the records retained, the related retention period,
and the locations where the records are
maintained. The master index shall be
subject to review by RUS and RUS
shall reserve the right to add records,
or lengthen retention periods upon
finding that retention periods may be
insufficient for its purposes.
(b) At each office where records are
kept or stored the borrower shall arrange, file, and index the records currently at that site so that they may be
readily identified and made available
to representatives of RUS.

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§ 1770.4

Record storage media.

Each RUS borrower has the flexibility to select its own storage media
subject to the following conditions:
(a) The storage media must have a
life expectancy at least equal to the
applicable retention period provided

for in the master index of records, unless there is quality transfer from one
media to another with no loss of data.
Each transfer of data from one media
to another must be verified for accuracy and documented.
(b) Each borrower is required to implement internal control procedures
that assure the reliability of, and ready
access to, data stored on machine-readable media. Internal control procedures
must be documented by a responsible
supervisory official.
(c) The records shall be indexed and
retained in such a manner that they
are easily accessible.
(d) The borrower shall have the hardware and software available to locate,
identify, and reproduce the records in
readable form without loss of clarity.
(e) At the expiration of the retention
period, the borrower may use any appropriate method to destroy records.
(f) When any records are lost or destroyed before the expiration of the retention period set forth in the master
index, a certified statement shall be
added to the master index listing, as
far as may be determined, the records
lost or destroyed and describing the
circumstances of the premature loss or
destruction.
§ 1770.5 Periods of retention.
(a) Except as provided for in paragraphs (b), (c), and (d) of this section,
record retention shall be consistent
with Prudent Utility Practice. Prudent
Utility Practice shall mean any of the
practices, methods, and acts which, in
the exercise of reasonable judgment, in
light of the facts, including but not
limited to, the practices, methods, and
acts engaged in or approved by a significant portion of the telecommunications industry prior thereto, known
at the time the decision was made,
would have been expected to accomplish the desired result consistent with
cost effectiveness, reliability, safety,
and expeditiousness. It is recognized
that Prudent Utility Practice is not intended to be limited to optimum practice, method, or act to the exclusion of
all others, but rather is a spectrum of
possible practices, methods, or acts
which could have been expected to accomplish the desired result at the lowest reasonable cost consistent with

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Rural Utilities Service, USDA

§ 1770.13

cost effectiveness, reliability, safety,
and expedition.
(b) Records supporting construction
financed by RUS shall be retained until
audited and approved by RUS.
(c) Records related to plant in service
must be retained until the facilities
are permanently removed from utility
service, all removal and restoration activities are completed, and all costs are
retired from the accounting records unless accounting adjustments resulting
from reclassification and original costs
studies have been approved by RUS or
other regulatory body having jurisdiction.
(d) Life and mortality study data for
depreciation purposes must be retained
for 25 years or for 10 years after plant
is retired whichever is longer.
§§ 1770.6–1770.9

[Reserved]

Subpart B—Uniform System of
Accounts
§ 1770.10

General.

This subpart implements provisions
of the standard RUS loan documents
with respect to the accounting system
accounts to be maintained by telecommunications borrowers of the
Rural Utilities Service.

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§ 1770.11 Accounting system requirements.
(a) Each RUS borrower subject to the
jurisdiction of the Federal Communications Commission (FCC) or a State regulatory body shall maintain its accounts and records in accordance with
the rules and regulations prescribed by
that regulatory body.
(b) Each RUS borrower not subject to
regulatory control as specified in
§ 1770.11(a) shall maintain its accounts
and records in accordance with the
FCC Uniform System of Accounts as
set forth in part 32 of the Commission’s
Rules and Regulations.
(1) RUS borrowers maintaining the
accounts prescribed in 47 CFR part 32
for Class A companies as of June 15,
2005, shall continue to do so. RUS suspends implementation of the reduced
number of Class A and B accounts,
until the Federal-State Joint Conference has reviewed them.

(2) New borrowers under the RUS
telecommunications
program
shall
maintain the accounts prescribed in 47
CFR part 32 for Class A companies.
(3) RUS borrowers maintaining the
accounts prescribed for Class B companies may adopt the Class A accounts if
they desire more detailed and sophisticated accounting records.
[55 FR 3388, Feb. 1, 1990, as amended at 70 FR
25756, May 16, 2005]

§ 1770.12

Supplementary accounts.

(a) All borrowers shall maintain the
supplementary accounts set forth in
§ 1770.15. These accounts conform in
number and title with accounts prescribed in the FCC Uniform System of
Accounts. In those instances in which a
State regulatory body having jurisdiction over an RUS borrower has prescribed a system of accounts differing
from that of the FCC, the account titles prescribed by RUS in § 1770.15 shall
remain unchanged; however, the supplementary account numbers shall be
changed to conform with the State’s
accounting system.
(b) In addition to the accounts set
forth in § 1770.15, cooperative or other
nonprofit borrowers shall maintain the
supplementary accounts set forth in
§ 1770.16.
(c) Borrowers are permitted to deviate from the specific subaccount numbers detailed in §§ 1770.15 and 1770.16
provided that the primary account
numbers and account descriptions conform with those prescribed.
(Approved by the Office of Management and
Budget under control number 0572–0003)

§ 1770.13

Accounting requirements.

(a) Each borrower shall maintain its
books of accounts on the accrual basis
of accounting. All transactions shall be
recorded in the period in which they
occur and reconciled monthly. The
books of accounts shall be closed at the
end of each fiscal year and financial
statements shall be prepared for the
period and audited in accordance with
the provisions of 7 CFR part 1773, RUS
Policy on Audits of Electric and Telephone Borrowers.
(b) All books of accounts, records,
and memoranda shall be maintained in
such a manner as to fully support the

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§ 1770.14

7 CFR Ch. XVII (1–1–11 Edition)

journal entries to which they relate.
The books and records referred to herein shall include records of a nontechnical nature such as minute books,
stock and membership records, reports,
correspondence, and memoranda.
(c) Interpretations of Federal or
State requirements shall be referred to
the applicable commission exercising
jurisdiction over the borrower.
(d) Interpretations of RUS accounting requirements shall be referred to
the Assistant Administrator, Program
Accounting and Regulatory Analysis,
Rural Utilities Service.
[55 FR 3388, Feb. 1, 1990, as amended at 70 FR
25756, May 16, 2005]

§ 1770.14

Continuing property records.

Each borrower shall maintain continuing property records which detail
the date of placement, location, description of property, and the original
cost of the property record units. The
continuing property record and other
underlying records of construction
costs shall be maintained so that upon
retirement of one or more retirement
units or of minor items without replacement when not included in the
costs of retirement units, the actual
cost of the plant retired can be determined.

§ 1770.15 Supplementary accounts required of all borrowers.
Accounts prescribed in the Stockholders’ Equity and Patronage Capital section
shall be maintained by stock companies and cooperatives as appropriate.
Class of company
Account No.
A

1130.1
1130.2
1130.3
1150.1

1120.11
1120.12
1120.13
1120.21
1120.31

1150.2

1120.32

1220.1
1220.2
1220.3

1220.1
1220.2
1220.3
1280.1
1280.2
1280.3
1280.4
1280.5

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Account title

1402.1
1402.11
1402.2
1402.3

2001.1
2001.2
2003.1
2003.2
2003.3

2001.1
2001.2
2003.1
2003.2
2003.3
2210.11
2210.21
2210.31

Current Assets
Cash—General Fund.
Cash—Construction Fund Trustee.
Cash—Transfer of Funds.
Special Cash Deposits.
Petty Cash Fund
This account shall include funds in the custody of employees or agents for making minor disbursements. The fund shall be operated on an imprest basis. Expenditures shall be supported by receipts,
and reimbursements to the fund shall be for the exact amount of such expenditures and shall be
charged to the various accounts to which the expenditures are allocable. At all times, the total of the
cash on hand and the unreimbursed expenditures shall equal the amount of the fund.
Change Fund.
Supplies
Materials and Supplies.
Property Held for Sale or Lease.
Exempt Materials—Clearing.
Prepayments
Prepaid Rents.
Prepaid Taxes.
Prepaid Insurance.
Prepaid Directory Expenses.
Other Prepayments.
Investments
Investments in Nonaffiliated Companies—Class B RTB Stock.
Investments in Nonaffiliated Companies—Class B RTB Stock—Cr.
Investments in Nonaffiliated Companies—Class C RTB Stock.
Other Investments in Nonaffiliated Companies.
Property, Plant, and Equipment
Telecommunications Plant in Service—Classified.
Telecommunications Plant in Service—Unclassified.
Telecommunications Plant Under Construction—Contract
Telecommunications Plant Under Construction—Force Account
Telecommunications Plant Under Construction—Work Orders
Telecommunications Plant in Service
Central Office Switching—Analog.
Central Office Switching—Digital.
Central Office Switching—Electro-Mechanical—Step-by-Step.

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Rural Utilities Service, USDA

§ 1770.15

Class of company
Account No.
A

2212.1
2212.2

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3100x

Account title

B
2210.32
2210.33
2212.1
2212.2
2230.11
2230.12
2230.21
3100x

2232.1
2232.2
4010.11
4010.21
4010.22
4010.23
4010.24
4010.25
4070.1
4070.2
4080.1
4080.2
4080.3
4080.4
4080.5
4120.1
4120.2
4120.3
4120.4
4120.5
4120.6

4210.11
4210.12
4210.13
4210.14
4210.15
4210.16
4210.17
4210.18
4210.19
4210.20
4210.21
4210.22
4210.23
4210.24

4540.11
4540.12
4540.13
4540.21
4540.22
4540.23
4540.31
4540.32
4540.33
4540.41
4550.1
4550.2
4550.3
4550.4
4550.5
4550.6

6212.1

6210.11
6210.21
6210.31
6212.1

Central Office Switching—Electro-Mechanical—Crossbar.
Central Office Switching—Electro-Mechanical—Other.
Digital Electronic Switching—Circuit.
Digital Electronic Switching—Packet.
Central Office Transmission—Radio Systems—Satellite and Earth Station Facilities.
Central Office Transmission—Radio Systems—Other.
Central Office Transmission—Circuit Equipment.
Depreciation and Amortization
Retirement Work in Progress.
Current Liabilities
Circuit Equipment—Electronic.
Circuit Equipment—Optical.
Accounts Payable to Affiliated Companies.
Accounts Payable to Nonaffiliated Companies.
Accounts Payable—Employees’ Income Tax Withheld.
Accounts Payable—FICA Taxes Withheld.
Accounts Payable—Federal Excise Taxes.
Accounts Payable—Payroll.
Income Taxes Accrued—Federal.
Income Taxes Accrued—State and Local
Other Taxes Accrued—Property.
Other Taxes Accrued—Employer’s Portion—FICA.
Other Taxes Accrued—Federal Unemployment.
Other Taxes Accrued—State Unemployment.
Other Taxes Accrued—Miscellaneous.
Unmatured Interest Accrued—RUS Notes.
Unmatured Interest Accrued—Telephone Bank Notes.
Unmatured Interest Accrued—Federal Financing Bank Notes.
Unmatured Interest Accrued—Bank for Cooperatives Notes.
Unmatured Interest Accrued—Rural Telephone Finance Cooperative Notes.
Other Accrued Liabilities.
Long-Term Debt
Funded Debt—Other.
RUS Notes.
Telephone Bank Notes.
Federal Financing Bank Notes.
Bank for Cooperatives Notes.
Rural Telephone Finance Cooperative Notes.
RUS Notes—Deferred Interest.
RUS Notes—Advance Payments, Dr.
Funded Debt—Other—Unadvanced, Dr.
RUS Notes—Unadvanced, Dr.
Telephone Bank Notes—Unadvanced, Dr.
Federal Financing Bank Notes—Unadvanced, Dr.
Bank for Cooperatives Notes—Unadvanced, Dr.
Rural Telephone Finance Cooperative Notes—Unadvanced, Dr.
Stockholders’ Equity and Patronage Capital
Capital Stock Subscribed.
Memberships Subscribed but Unissued.
Members’ Equity Certificates Subscribed but Unissued.
Memberships Issued.
Members’ Equity Certificates Issued.
Members’ Equity—Other.
Installments Paid on Capital Stock.
Installments Paid on Memberships Subscribed.
Installments Paid on Equity Certificates Subscribed.
Other Capital—Miscellaneous.
Operating Margins.
Nonoperating Margins.
Other Margins.
Patronage Capital Assignable.
Patrons’ Capital Credits Assigned.
Gain on the Retirement of Capital Credits.
Plant Specific Operations Expense
Analog Electronic Expense.
Digital Electronic Expense.
Electro-Mechanical Expense.
Digital Electronic Switching Expense—Circuit.

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§ 1770.15

7 CFR Ch. XVII (1–1–11 Edition)

Class of company
Account No.
A
6212.2

6232.1
6232.2

6212.2
6230.11
6230.21
6232.1
6232.2

6620.1
6620.2

6560.1
6560.2
6620.1
6620.2

7240.1
7240.2

7200.1
7200.2
7200.3
7200.41
7200.42
7200.5
7300.1
7300.2
7300.3
7300.4
7300.5
7300.6
7400.1
7400.2
7400.3
7400.4
7400.5

1130.1

7600.1
7600.2
7600.3
7600.4
1120.11

1130.2

1120.12

1130.3

1120.13

1120.21

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Account title

B
Digital Electronic Switching Expense—Packet.
Radio Systems Expense.
Circuit Equipment Expense.
Circuit Equipment Expense—Electronic.
Circuit Equipment Expense—Optical.
Plant Nonspecific Operations Expense
Depreciation Expense.
Amortization Expense.
Services—Wholesale.
Services—Retail.
Operating Taxes.
Operating Investment Tax Credits—Net.
Operating Federal Income Taxes.
Operating State and Local Income Taxes.
Operating Taxes—Property.
Operating Taxes—Miscellaneous.
Provision for Deferred Operating Income Taxes—Net.
Nonoperating Income and Expense
Dividend Income.
Interest Income.
Income From Sinking and Other Funds.
Allowance for Funds Used During Construction.
Gains or Losses from the Disposition of Certain Property.
Other Nonoperating Income and Expense.
Nonoperating Taxes
Nonoperating Investment Tax Credits—Net.
Nonoperating Federal Income Taxes.
Nonoperating State and Local Income Taxes.
Nonoperating Other Taxes.
Provision for Deferred Nonoperating Income Taxes—Net.
Extraordinary Items
Extraordinary Income Credits.
Extraordinary Income Charges.
Current Income Tax Effect of Extraordinary Items—Net.
Provision for Deferred Income Tax Effect of Extraordinary Items—Net.
Cash—General Fund
This account shall include all unrestricted funds derived from revenues and other sources which are on
deposit in banks or other financial institutions and available on demand. It shall also include funds in
transit to the depository for which customers and agents have received credit on their accounts. Separate subaccounts should be maintained for each bank account in which general fund cash is deposited.
Cash—Construction Fund Trustee
This account shall include all loan funds received from RUS, the Rural Telephone Bank, the Federal Financing Bank, the Bank for Cooperatives, the Rural Telephone Finance Cooperative, and all non-loan
funds supplied by the borrower under the terms of the loan contract or otherwise required by RUS.
The offsetting credit for funds received from RUS shall be to Account 4210.20, RUS Notes—
Unadvanced, Dr.; funds received from the Rural Telephone Bank, to Account 4210.21, Telephone
Bank Notes—Unadvanced, Dr.; funds received from the Federal Financing Bank, to Account 4210.22,
Federal Financing Bank Notes—Unadvanced, Dr.; funds received from the Bank for Cooperatives, to
Account 4210.23, Bank for Cooperatives Notes—Unadvanced, Dr.; and funds received from the Rural
Telephone Finance Cooperative, to Account 4210.24, Rural Telephone Finance Cooperative Notes—
Unadvanced, Dr.
Cash—Transfer of Funds
This account shall include all transfers of funds from one bank account to another. This account shall
be charged with the amount of a check drawn for the transfer, and credited when the amount transferred is entered into the Cash Receipts Book.
Special Cash Deposits
This account shall include all 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 the date of the deposit; and other cash deposits of a special nature not provided for elsewhere. This account 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.

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Rural Utilities Service, USDA

§ 1770.15

Class of company
Account No.
A
1150.1

Account title

B
1120.31

Petty Cash Fund
This account shall include funds in the custody of employees or agents for making minor disbursements. The fund shall be operated on an inprest basis. Expenditures shall be supported by receipts,
and reimbursements to the fund shall be for the exact amount of such expenditures and shall be
charged to the various accounts to which the expenditures are allocable. At all times, the total of the
cash on hand and the unreimbursed expenditures shall equal the amount of the fund.

1150.2

1120.32

Change Fund
This account shall include funds in the custody of employees or agents for making change. Records
shall be kept of the amount held by each person. Disbursements shall not be made from the fund.

1220.1

Materials and Supplies*
This account shall include the cost of materials 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.
Transportation charges and sales and use taxes, as far as practicable, shall be included 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 particular material shall be equitably apportioned among the
accounts to which material is charged.
As far as practicable, cash and other discounts 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 accounts
to which material is charged.
Material recovered in connection with construction, maintenance or retirement of property shall be
charged to this account as follows:
—Reusable items that, when installed or in service, were retirement units shall be included in this account at the original cost.
—Reusable minor items that, when installed or in service, were not retirement units shall be included
in this account at current prices new.
—The cost of repairing reusable material shall be charged to the appropriate Plant Specific Operations Expense accounts.
—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 shall be adjusted in the accounts
credited when the material was taken up in this account.
Interest paid on material bills, the payments of which are delayed, shall be charged to Account 7540,
Other Interest Deductions.
Inventories of materials and supplies shall be taken during each calendar year and the adjustments to
this account shall be charged or credited to Account 6512, Provisioning Expense.

1220.2

Property Held for Sale or Lease*
This account shall include the cost of all items purchased for resale or lease. The cost shall include applicable transportation charges, sales and use taxes, and cash and other purchase discounts. Inventory shortages and overages shall be charged and credited, respectively to Account 7991, Other Nonregulated Revenues.
*These accounts 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.

1220.3

Exempt Materials—Clearing
This account shall include the cost of materials and supplies designated as exempt material on the carrier’s ‘‘Exempt Material List’’. Charges to this account shall be cleared monthly to the primary plant
and maintenance accounts in accordance with percentages developed by the individual carriers.
When there is a substantial amount of exempt material on hand at the end of the year, substantial
enough to distort net income or margins, a physical inventory may be taken. The cost of the inventory
on hand shall be debited to this account and credited to the appropriate primary plant and maintenance accounts on a pro-rata basis related to the original charges to these accounts. This entry shall
be reversed at the first of the year.

1280.1

Prepaid Rents

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This account shall include the amount of rents paid in advance of the period in which it is chargeable to
income, except amounts chargeable to telecommunications plant under construction and minor
amounts which may be charged directly to the final accounts. As the term expires for which the rents
are paid, this account shall be credited monthly and the appropriate account charged.
1280.2

Prepaid Taxes
This account shall include the balance of all taxes paid in advance of the period in which they are
chargeable to income, except amounts chargeable to telecommunications plant under construction
and minor amounts which may be charged directly to the final accounts. As the term expires for
which the taxes are paid, this account shall be credited monthly and the appropriate account charged.

1280.3

Prepaid Insurance

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§ 1770.15

7 CFR Ch. XVII (1–1–11 Edition)

Class of company
Account No.
A

Account title

1280.4

This account shall include the amount of insurance premiums paid in advance of the period in which
they are chargeable to income, except premiums chargeable to telecommunications plant under construction and minor amounts which may be charged directly to the final accounts. As the term expires
for which the premiums are paid, this account shall be credited monthly and the appropriate account
charged.
Prepaid Directory Expenses
This account shall include the cost of preparing, printing, binding, and delivering directories and the cost
of soliciting advertisements for directories, except minor amounts which may be charged directly to
Account 6620, Services. Amounts in this account, shall be cleared to Account 6620 by monthly
charges representing that portion of the expenses applicable to each month.

1280.5

Other Prepayments
This amount shall include prepayments, other than those includable in Accounts 1280.1 through 1280.4
except minor amounts which may be charged directly to the final accounts. As the term expires for
which the payments apply, this account shall be credited monthly and the appropriate account
charged.

1402.1

Investments in Nonaffiliated Companies—Class B RTB Stock
This account shall include the par value of the required purchase of Class B Rural Telephone Bank
stock and the par value of the Class B Rural Telephone Bank stock received as a patronage refund.
This account shall be debited at the time the refund is received and Account 1402.11, Investments in
Nonaffiliated Companies—Class B RTB Stock—Cr., credited.
This account shall be credited and Account 1402.11 debited when the patronage refund is redeemed.

1402.11

Investments in Nonaffiliated Companies—Class B RTB Stock—Cr.
This account shall include the par value of Class B Rural Telephone Bank stock received as a patronage refund. This account shall be credited at the time the refund is received and Account 1402.1, Investments in Nonaffiliated Companies—Class B RTB Stock, debited.
This account shall be debited and Account 1402.1 credited when the patronage refund is redeemed.

1402.2

Investments in Nonaffiliated Companies—Class C RTB Stock
This account shall include the par value of the company’s investment in Class C Rural Telephone Bank
stock. Cash dividends on Class C stock shall be recorded in Account 7310/7300.1, Dividend Income,
when declared.

1402.3

Other Investments in Nonaffiliated Companies
This account shall include the acquisition cost of the company’s investment in securities issued by nonaffiliated companies, other than securities held in special funds which shall be charged to Account
1408, Sinking Funds, and also its investment advances to such parties and special deposits of cash
for more than one year from the date of deposit.
Declines in value of investments shall be charged to Account 4540.41, Other Capital, if temporary and
as a current period loss if permanent. Detailed records shall be maintained to reflect unrealized
losses for each investment.

2001.1

Telecommunications Plant in Service—Classified

2001.2

This account shall include the original cost of the property capitalized in Accounts 2110 through 2690.
Telecommunications Plant in Service—Unclassified
This account shall include the original cost of telecommunications property which has been completed
and placed in service but which has not been classified pending completion of final inventories of
construction, final cost summaries, etc. The balance in this account is subject to depreciation
charges.

2003.1

Telecommunications Plant Under Construction—Short Term—Contract
This account shall include all costs incurred in the construction of telecommunications plant performed
under contract and the cost of software development projects that are not yet ready for their intended
use. Included among these costs are contractor payments and charges for engineering, supervision,
taxes, insurance, transportation, and other costs incurred in contract construction. This account shall
be maintained such that the various items of cost are readily identifiable.

WReier-Aviles on DSKGBLS3C1PROD with CFR

2003.2

Telecommunications Plant Under Construction—Short Term—Force Account
This account shall include all costs incurred in the construction of telecommunications plant performed
by the borrowers’ own employees and the cost of software development projects performed by the
borrowers’ own employees that are not yet ready for their intended use. Included among these costs
are charges for material, labor, engineering, supervision, taxes, insurance, transportation, supply expense, and other costs incurred in the construction. This account shall be maintained such that the
various items of cost are readily identified. Specific subaccounts should be maintained to distinguish
individual projects.

2003.3

Telecommunications Plant Under Construction—Short Term—Work Orders

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Rural Utilities Service, USDA

§ 1770.15

Class of company
Account No.
A

Account title

B
This account shall include all costs incurred in the construction of telecommunication plant performed
under a work order system or line extension contract. This type of construction generally includes
service installations, subscriber extensions, and minor plant improvements after the completion of the
initial system. Included among these costs are charges for labor, material and supplies, transportation, payroll taxes, insurance, supervision, and other costs incurred in the construction. Subsidiary
records shall be maintained to reflect the cost of the individual jobs. These records shall be reconciled periodically with the general ledger control account. Specific subaccounts should be maintained to accumulate costs incurred under line extension contracts.
2210.11

Central Office Switching—Analog*
This account shall include the original cost of stored program control analog circuit-switching and associated equipment. This account shall also include the original cost of remote analog electronic circuit
switches.

2210.21

Central Office Switching—Digital*
This account shall include the original cost of stored program control digital switches and their associated equipment. Included in this account is the original cost of digital switches which utilize either
dedicated or non-dedicated circuits. This account shall also include the original cost of remote digital
electronic switches.

2210.31

Central Office Switching—Electro-Mechanical—Step-by-Step*

2210.32

Central Office Switching—Electro-Mechanical—Crossbar*

This account shall include the original cost of step-by-step and associated circuit-switching equipment.
This account shall include the original cost of crossbar and associated circuit switching equipment. Also
included in this account is the original cost of electronic translator system equipment used in switching.
2210.33

Central Office Switching—Electro-Mechanical—Other*
This account shall include the original cost of all other types of non-electronic circuit-switching equipment such as panel systems and their associated circuit-switching equipment.
*Switching plant excludes switchboards which perform operator assistance functions and equipment
which is an integral part thereof. It does not exclude equipment used solely for the recording of calling
telephone numbers in connection with customer dialed charged traffic, dial tandem switches, and special switchboards used in conjunction with private line service; such equipment shall be classified to the
particular switch that it serves.

2230.11

Central Office Transmission—Radio Systems—Satellite and Earth Station Facilities
This account shall include the original cost of an ownership interest in satellites (including land-side
spares), other spare parts, materials, and supplies. It shall include launch insurance and other satellite launch costs. This account shall also include the original cost of earth stations and spare parts,
materials, and supplies therefor.

2230.12

Central Office Transmission—Radio Systems—Other
This account shall include the original cost of radio equipment used to provide radio communication
channels. Radio equipment is that equipment which is used for the generation, amplification, propagation, reception, modulation, and demodulation of radio waves in free space over which communications channels can be provided. This account shall also include the associated carrier and auxiliary
equipment and patch bay equipment which is an integral part of the radio equipment. Such equipment may be located in central office buildings, terminal rooms, or repeater stations or may be
mounted on towers, masts, or other supports.

WReier-Aviles on DSKGBLS3C1PROD with CFR

2230.21

Central Office Transmission—Circuit Equipment
This account shall include the original cost of equipment which is used to reduce the number of physical pairs otherwise required to serve a given number of subscribers by utilizing carrier systems, concentration stages or combinations of both. It shall include equipment that provides for simultaneous
use of a number of interoffice channels on a single transmission path. This account shall also include
the original cost of equipment which is used for the amplification, modulation, regeneration, circuit
patching, balancing or control of signals transmitted over interoffice communications transmission
channels. This account shall include the original cost of equipment which utilizes the message path to
carry signaling information or which utilizes separate channels between switching offices to transmit
signaling information independent of the subscribers’ communication paths or transmission channels.
This account shall also include the original cost of associated material used in the construction of
such plant. Circuit equipment may be located in central offices, in manholes, on poles, in cabinets or
huts or at other locations.
This account excludes carrier and auxiliary equipment and patch bay which are recorded in Account
2230.12, Central Office Transmission—Radio Systems—Other

3100x

Retirement Work in Progress

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§ 1770.15

7 CFR Ch. XVII (1–1–11 Edition)

Class of company
Account No.

WReier-Aviles on DSKGBLS3C1PROD with CFR

Account title

4010.11

4010.21

4010.22

4010.23

4010.24

4010.25

4070.1

4070.2

4080.1

4080.2

4080.3

4080.4

4080.5

4120.1

4120.2

This account shall be charged with the original cost of property retired from the telecommunications
plant accounts. It shall also be charged with all of the costs incurred in removing the retired plant
from service. This account shall be credited with the salvage value of materials recovered in the retirement of the telecommunications plant. At such time as the retirement work order is complete, the
net income/loss resulting therefrom shall be transferred from this account to the appropriate primary
plant depreciation reserve account.
Accounts Payable to Affiliated Companies
This account shall include all amounts currently due to affiliated companies for recurring trade obligations, and not provided for in other accounts, such as those for traffic settlements, material and supplies, repairs to telecommunications plant, matured rents, and interest payable under monthly settlements on short-term loans, advances, and open accounts.
Accounts Payable to Nonaffiliated Companies
This account shall include all amounts currently due to nonaffiliated companies for recurring trade obligations, and not provided for in other accounts, such as those for traffic settlements, materials and
supplies, repairs to telecommunications plant, matured rents, and interest payable under monthly settlements on short-term loans, advances, and open accounts.
Accounts Payable—Employees’ Income Tax Withheld
This account shall include income taxes payable that have been withheld from employees’ salaries.
Accounts Payable—FICA Taxes Withheld
This account shall include FICA taxes payable that have been withheld from employees’ salaries.
Accounts Payable—Federal Excise Taxes
This account shall include Federal excise taxes payable.
Accounts Payable—Payroll
This account shall include amounts payable to the company’s employees in the form of salaries or
wages.
Income Taxes Accrued—Federal
For Class A companies, this account shall be credited and Accounts 7220, 7420, and 7630, as appropriate, shall be debited for the amount of Federal income taxes accrued during the current operating
period.
For Class B companies, this account shall be credited and Accounts 7220.2, 7400.2, and 7600.3, as
appropriate, shall be debited for the amount of Federal income taxes accrued during the current operating period.
Income Taxes Accrued—State and Local
For Class A companies, this account shall be credited and Accounts, 7230, 7430, and 7630, as appropriate, shall be debited for the amount of state and local income taxes accrued during the current operating period.
For Class B companies, this account shall be credited and Accounts, 7200.3, 7400.3, and 7600.3, as
appropriate, shall be debited for the amount of state and local income taxes accrued during the current operating period.
Other Taxes Accrued—Property
This account shall be credited and Account 7240.1/7200.41, Operating Taxes—Property, shall be debited for the amount of property taxes accrued during the current operating period.
Other Taxes Accrued—Employer’s Portion—FICA
This account shall be credited and the appropriate construction, depreciation, or expense account shall
be debited for the employer’s portion of FICA taxes accrued during the current operating period.
Other Taxes Accrued—Federal Unemployment
This account shall be credited and the appropriate construction, removal, or expense account shall be
debited for the amount of Federal unemployment taxes accrued during the current operating period.
Other Taxes Accrued—State Unemployment
This account shall be credited and the appropriate construction, removal, or expense account shall be
debited for the amount of state unemployment taxes accrued during the current operating period.
Other Taxes Accrued—Miscellaneous
This account shall be credited and Account 7240.2/7200.42, Operating Taxes—Miscellaneous, shall be
debited for the amount of all other taxes accrued during the current operating period and not provided
for elsewhere such as a gross receipts tax, franchise taxes, and capital stock taxes.
Unmatured Interest Accrued—RUS Notes
This account shall include the interest accrued as of the balance sheet date but not payable until after
that date on RUS mortgage notes.
Interest expense incurred during the period of construction of telecommunications plant shall be
charged to Account 2004, Telecommunications Plant Under Construction—Long Term, and credited
to Account 7340/7300.4, Allowance for Funds Used During Construction.
Unmatured Interest Accrued—Telephone Bank Notes

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Rural Utilities Service, USDA

§ 1770.15

Class of company
Account No.
A

Account title

B
This account shall include the interest accrued as of the balance sheet date but not payable until after
that date on Rural Telephone Bank mortgage notes.
Interest expense incurred during the period of construction of telecommunications plant shall be
charged to Account 2004, Telecommunications Plant Under Construction—Long Term, and credited
to Account 7340/7300.4, Allowance for Funds Used During Construction.

4120.3

Unmatured Interest Accrued—Federal Financing Bank Notes
This account shall include the interest accrued as of the balance sheet date but not payable until after
that date on Federal Financing Bank mortgage notes.
Interest expense incurred during the period of construction of telecommunications plant shall be
charged to Account 2004, Telecommunications Plant Under Construction—Long Term, and credited
to Account 7340/7300.4, Allowance for Funds Used During Construction.

4120.4

Unmatured Interest Accrued—Bank for Cooperatives Notes
This account shall include the interest accrued as of the balance sheet date but not payable until after
that date on Bank for Cooperatives mortgage notes.
Interest expense incurred during the period of construction of telecommunications plant shall be
charged to Account 2004, Telecommunications Plant Under Construction—Long Term, and credited
to Account 7340/7300.4, Allowance for Funds Used During Construction.

4120.5

Unmatured Interest Accrued—Rural Telephone Finance Cooperative Notes
This account shall include the interest accrued as of the balance sheet date but not payable until after
that date on Rural Telephone Finance Cooperative mortgage notes.
Interest expense incurred during the period of construction of telecommunications plant shall be
charged to Account 2004, Telecommunications Plant Under Construction—Long Term, and credited
to Account 7340/7300.4, Allowance for Funds Used During Construction.

4120.6

Other Accrued Liabilities
This account shall include the amount of wages, compensated absences, interest on indebtedness of
the company, dividends on capital stock, and rents accrued as of the balance sheet date but not payable until after the date.
This account shall not include interest accrued on RUS, Rural Telephone Bank, Bank for Cooperatives,
Federal Financing Bank, or Rural Telephone Finance Cooperative debt.

4210.11

Funded Debt—Other
This account shall include the total face amount of unmatured debt, maturing more than one year from
the 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.
This account shall not include unmatured RUS, Rural Telephone Bank, Federal Financing Bank, Bank
for Cooperatives, or Rural Telephone Finance Cooperative debt.

4210.12

RUS Notes
This account shall include the total face amount of unmatured RUS mortgage notes. Account 4210.20,
RUS Notes—Unadvanced, Dr., shall be charged and this account credited upon execution of the
notes.
If principal installments are not paid at the maturity date, the amount due shall be transferred to Account 4050, Current Maturities—Long-Term Debt.

4210.13

Telephone Bank Notes
This account shall include the total face amount of unmatured Rural Telephone Bank mortgage notes.
Account 4210.21, Telephone Bank Notes—Unadvanced, Dr., shall be changed and this account credited upon execution of the notes.
If principal installments are not paid at the maturity date, the amount due shall be transferred to Account 4050, Current Maturities—Long-Term Debt.

4210.14

Federal Financing Bank Notes
This account shall include the total face amount of unmatured Federal Financing Bank mortgage notes.
Account 4210.22, Federal Financing Bank Notes—Unadvanced, Dr., shall be charged and this account credited upon execution of the notes.
If principal installments are not paid at the maturity date, the amount due shall be transferred to Account 4050, Current Maturities—Long-Term Debt.

WReier-Aviles on DSKGBLS3C1PROD with CFR

4210.15

Bank for Cooperatives Notes
This account shall include the total face amount of unmatured Bank for Cooperatives mortgage notes.
Account 4210.23, Bank for Cooperatives Notes—Unadvanced, Dr., shall be charged and this account
credited upon execution of the notes.
If principal installments are not paid at the maturity date, the amount due shall be transferred to Account 4050, Current Maturities—Long-Term Debt.

4210.16

Rural Telephone Finance Cooperative Notes
This account shall include the total face amount of unmatured Rural Telephone Finance Cooperative
mortgage notes. Account 4210.24, Rural Telephone Finance Cooperative Notes—Unadvanced, Dr.,
shall be charged and this account credited upon execution of the notes.

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§ 1770.15

7 CFR Ch. XVII (1–1–11 Edition)

Class of company
Account No.

WReier-Aviles on DSKGBLS3C1PROD with CFR

Account title

4210.17

4210.18

4210.19

4210.20

4210.21

4210.22

4210.23

4210.24

4540.11

4540.12

4540.13

4540.21

4540.22

If principal installments are not paid at the maturity date, the amount due shall be transferred to Account 4050, Current Maturities—Long-Term Debt.
RUS Notes—Deferred Interest
This account shall include interest accrued on RUS mortgage notes, the payment of which has been
deferred in accordance with the terms of the notes or extension agreements. The offsetting charge
shall be to Account 7510, Interest on Funded Debt, for Class A companies and Account 7500, Interest and Related Items, for Class B companies.
If interest payments are not made at the due date, this account shall be debited and Account 4010.21,
Accounts Payable to Nonaffiliated Companies, credited with the amount of the matured interest.
RUS Notes—Advance Payments, Dr.
This account shall include all payments on RUS mortgage notes made in advance of the due date and
not applied to a specific quarterly payment. As these payments are applied to specific notes, this account shall be credited and the long-term debt and interest liability accounts debited.
Funded Debt—Other—Unadvanced, Dr.
This account shall include the total face amount of notes executed to others, for which funds have not
been received.
This account shall be credited and Account 1130.1/1120.11, Cash—General Funds, debited when funds
are received from the lender.
RUS Notes—Unadvanced, Dr.
This account shall include the total face amount of RUS mortgage notes for which funds have not been
received.
This account shall be credited and Account 1130.2/1120.12, Cash—Construction Fund Trustee, debited
when funds are received from RUS.
Telephone Bank Notes—Unadvanced, Dr.
This account shall include the total face amount of Rural Telephone Bank mortgage notes for which
funds have not been received.
This account shall be credited and Account 1130.2/1120.12, Cash—Construction Fund Trustee, debited
when funds are received from the Rural Telephone Bank.
Federal Financing Bank Notes—Unadvanced, Dr.
This account shall include the total face amount of Federal Financing Bank mortgage notes for which
funds have not been received.
This account shall be credited and Account 1130.2/1120.12, Cash—Construction Fund Trustee, debited
when funds are received from the Federal Financing Bank.
Bank for Cooperatives Notes—Unadvanced, Dr.
This account shall include the total face amount of Bank for Cooperatives mortgage notes for which
funds have not been received.
This account shall be credited and Account 1130.2/1120.12, Cash—Construction Fund Trustee, debited
when funds are received from the Bank for Cooperatives.
Rural Telephone Finance Cooperative Notes—Unadvanced, Dr.
This account shall include the total face amount of Rural Telephone Finance Cooperative mortgage
notes for which funds have not been received.
This account shall be credited and Account 1130.2/1120.12, Cash—Construction Fund Trustee, debited
when funds are received from the Rural Telephone Finance Cooperative.
Capital Stock Subscribed.
This account shall include the par value of capital stock for which legally enforceable subscriptions have
been received but for which, at the date of the balance sheet, stock certificates have not been issued.
This account shall be debited and Account 4510, Capital Stock, credited when a subscriber has paid
the subscription in full and stock certificates are issued.
Memberships Subscribed but Unissued.
This account shall include the face amount of memberships subscribed but not issued. This account
shall be credited at the time the subscription is received and Account 1350.2, Subscriptions to Memberships, debited.
This account shall be debited and Account 4540.21, Memberships Issued, credited when a subscriber
has paid the subscription in full and the membership certificates are issued.
Members’ Equity Certificates Subscribed but Unissued.
This account shall include the face amount of members’ equity certificates subscribed but not issued.
This account shall be credited at the time the subscription is received and Account 1350.3, Subscriptions to Members’ Equity Certificates, debited.
This account shall be debited and Account 4540.22, Members’ Equity Certificates Issued, credited when
a subscriber has paid the subscription in full and the members’ equity certificates are issued.
Memberships Issued.
This account shall include the face amount of membership certificates outstanding. A subsidiary membership certificate record shall be maintained to reflect the detail of the balance in this account.
Member’s Equity Certificates Issued.

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Rural Utilities Service, USDA

§ 1770.15

Class of company
Account No.
A

Account title

B
This account shall include the face amount of members’ equity certificates outstanding. A subsidiary
members’ equity certificate record shall be maintained to reflect the detail of the balance in this account.

4540.23

Members’ Equity—Other.
This account shall include credit amounts arising from donations, forfeitures of membership fees, forgiveness of debts of the cooperative, and member’s equities not otherwise provided for.

4540.31

Installments Paid on Capital Stock.
This account shall include the amount of installments paid on capital stock on a partial or installment
payment plan by subscribers against whom there is no legally enforceable subscription contract, and
who are entitled to be reimbursed the principal amount of their payments, with or without interest, in
the event they fail to complete payment for the stock and receive certificates therefore.
This account shall be debited and Account 4510, Capital Stock, credited with the par value of capital
stock when the total subscription is received and the stock certificates are issued. Any difference between the purchase price of the subscription and the par value of the stock shall be credited to Account 4520, Additional Paid-In Capital.
A subsidiary ledger shall be maintained to record for each subscriber, the amount subscribed, payments
made, and the balance due. The balance in this account shall be reconciled monthly with the subscription ledger.

4540.32

Installments Paid on Memberships Subscribed.
This account shall include the amount of installments paid by prospective members on membership
subscriptions against whom there is no legally enforceable subscription contract, and who are entitled
to be reimbursed for the principal amount of their payments, with or without interest, in the event they
fail to complete payment for the membership and receive certificates therefor.
This account shall be debited and Account 4540.21, Memberships Issued, credited with the face
amount of the membership when the total subscription is received and the membership certificates
are issued.
A subsidiary ledger shall be maintained to record for each subscriber, the amount subscribed, payments
made, and the balance due. The balance in this account shall be reconciled monthly with the subscription ledger.

4540.33

Installments Paid on Equity Certificates Subscribed
This account shall include the amount of installments paid by prospective members on equity certificate
subscriptions against whom there is no legally enforceable subscription contract, and who are entitled
to be reimbursed for the principal amount of their payments, with or without interest, in the event they
fail to complete payment for the membership and receive equity certificates therefor.
This account shall be debited and Account 4540.22, Members’ Equity Certificates Issued, credited with
the face amount of the memberships when the total subscription is received and the equity certificates are issued.
A subsidiary ledger shall be maintained to record for each subscriber, the amount subscribed, payments
made, and the balance due. The balance in this account shall be reconciled monthly with the subscription ledger.

4540.41

Other Capital—Miscellaneous
This account shall include amounts which are credits arising from capital recorded upon the reorganization or recapitalization of the company and temporary declines in the value of marketable securities
held for investment purposes.

4550.1

Operating Margins
This account shall include amounts received or receivable from the furnishing of telecommunications
service in excess of costs incurred in the furnishing of such service. If costs exceed revenues, the excess cost of furnishing telecommunications service shall be recorded as a debit to this account.

4550.2

Nonoperating Margins
This account shall include margins arising from transactions or activities not related to the furnishing of
telecommunications service. Included in this account are receipts from investments, income from investments, income from nonoperating plant, and revenues derived from services performed for others
incident to the company’s regulated telecommunications operations.

WReier-Aviles on DSKGBLS3C1PROD with CFR

4550.3

Other Margins
This account shall include patronage capital credits assigned to the cooperative by other nonprofit organizations prior to January 1, 1970, which were not credited directly to an operating expense account
as a reduction in the cost of furnishing telecommunications service.
No entries shall be made to this account unless it is to distribute or eliminate prior balances in conformance with the bylaws of the cooperative.

4550.4

Patronage Capital Assignable
This account shall include all amounts transferred from operating margins, nonoperating margins, and
other margin accounts which are assignable to individual patrons.

4550.5

Patrons’ Capital Credits Assigned

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§ 1770.15

7 CFR Ch. XVII (1–1–11 Edition)

Class of company
Account No.
A

Account title

B
This account shall include the amounts of patronage capital which have been credited to individual patrons. A subsidiary patronage capital ledger shall be maintained so as to reflect the amount of capital
furnished by each patron and the amount of such capital returned to the patron.

4550.6

Gain on the Retirement of Capital Credits
This account shall include credits resulting from the retirement of patronage capital through settlement
of individual patrons’ accounts at less than 100 percent of the capital assigned to the patron. The portion of patronage capital not returned to patrons under such settlements shall be debited to Account
4550.5, Patrons’ Capital Credits Assigned, and credited to this account.
This account shall also include amounts representing patronage capital authorized to be retired to patrons who cannot be located. Returned checks issued for retirements of patronage capital, after an
appropriate waiting period, shall be credited to this account and a record shall be maintained adequate to enable the cooperative to make payment to the patron if and when a claim has been established by the patron.

6210.11

Analog Electronic Expense

6210.21

Digital Electronic Expense

6210.31

Electro-Mechanical Expense

6230.11

Radio Systems Expense

6230.21

Circuit Equipment Expense

6560.1

Depreciation Expense

This account shall include expenses associated with analog electronic switching.
This account shall include expenses associated with digital electronic switching.
This account shall include expenses associated with electro-mechanical switching.
This account shall include expenses associated with radio systems.
This account shall include expenses associated with circuit equipment.
This account shall include the depreciation expense associated with telecommunications plant in service
(Accounts 2112 through 2441) and property held for future telecommunications use (Account 2002).
6560.2

Amortization Expense
This account shall include the amortization expense associated with capital leases and leasehold improvements (Accounts 2681 and 2682), intangibles (Account 2690), and telecommunications plant adjustments (Account 2005).

7200.1

Operating Investment Tax Credits—Net
This account shall be charged and Account 4320, Unamortized Operating Investment Tax Credits—Net,
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.
This account shall be credited and Account 4320 shall be charged ratably with the amortization of each
year’s investment tax credits included in Account 4320 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.

7200.2

Operating Federal Income Taxes
This account shall be charged and Account 4070.1, Income Taxes Accrued—Federal, shall be credited
for the amount of Federal income tax expense incurred in the current operating 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.

7200.3

Operating State and Local Income Taxes
This account shall be charged and Account 4070.2, Income Taxes Accrued—State and Local, shall be
credited for the amount of state and local income tax expense incurred in the current operating 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.

7240.1

7200.41

Operating Taxes—Property

WReier-Aviles on DSKGBLS3C1PROD with CFR

This account shall be charged and Account 4080.1, Other Taxes Accrued—Property, shall be credited
for the amount of property tax expense incurred in the current operating 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.
7240.2

7200.42

Operating Taxes—Miscellaneous
This account shall be charged and Account 4080.5, Other Taxes Accrued—Miscellaneous, shall be
credited for the amount of all other taxes accrued during the current operating period and not provided for elsewhere such as gross receipts, franchise, and capital stock tax expense incurred in the
current operating period. This account shall also reflect subsequent adjustments to amounts previously charged.

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Rural Utilities Service, USDA

§ 1770.15

Class of company
Account No.
A

Account title

B
Taxes should be accrued each month on an estimated basis and adjustments made as later data becomes available.
7200.5

Provision for Deferred Operating Income Taxes-Net
This account shall be charged or credited, as appropriate, with contra entries recorded in either Account
4100, Net Current Deferred Operating Income Taxes, or Account 4340, Net Noncurrent Deferred Operating Income Taxes, as appropriate, for income tax expense that has been deferred.
Subsidiary record categories shall be maintained to distinguish between property and nonproperty related deferrals and so that the company may separately report the amounts contained herein that relate to Federal, state, and local income taxes.

7300.1

Dividend Income
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, or otherwise controlled.
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 or other funds.
Dividends on stocks of other companies held in sinking or other funds shall be credited to Account
7300.3, Income from Sinking and Other Funds.
Dividends received and receivable from affiliated companies accounted for on the equity method shall
be included in Account 1401, Investments in Affiliated Companies, as a reduction of the carrying
value of the investments.

7300.2

Interest Income
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) 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 the 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. Any such difference remaining unextinguished at the sale or upon
the maturity and satisfaction of such securities shall be cleared to Account 7300.6. Other Nonoperating Income and Expense.

7300.3

Income from Sinking and Other Funds
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. Any
such differences remaining unextinguished upon the maturity and satisfaction of such securities shall
be cleared to Account 7300.6. Other Nonoperating Income and Expense.

7300.4

Allowance for Funds Used During Construction
This account shall be credited with such amounts as are charged to the telecommunications plant accounts for the purpose or recording an allowance for funds used for construction purposes.

7300.5

Gains or Losses from the Disposition of Certain Property
This account shall include gains or losses resulting from the disposition of land or artworks; plant with
traffic, and nonoperating telecommunications plant not previously used in the provision of telecommunication services.

WReier-Aviles on DSKGBLS3C1PROD with CFR

7300.6

Other Nonoperating Income and Expense
This account shall include all other items of income and gains or losses from activities not specifically
provided for elsewhere such as gains or losses realized on the sale of temporary cash investments or
marketable equity securities; fees collected in connection with the exchange of coupon bonds for registered bonds; uncollectible amounts previously credited to Accounts 7300.1, 7300.2, 7300.3, 7300.4,
7300.5, and 7300.6, gains or losses from the extinguishment of debt made to satisfy sinking fund requirements; gains or losses of a nonoperating nature arising from the exchange or translation of foreign currency; net unrealized losses on investments in current marketable equity securities; writedowns or write-offs of the book costs of investments in equity securities due to permanent impairment; amortization of goodwill; the company’s share of earnings or losses of affiliated companies accounted for on the equity method; and the net balance of the revenue from and the expenses of
property, plant, and equipment, the cost of which is includable in Account 2006, Nonoperating Plant.

7400.1

Nonoperating Investment Tax Credits—Net

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§ 1770.15

7 CFR Ch. XVII (1–1–11 Edition)

Class of company
Account No.
A

Account title

B
This account shall be charged and Account 4330, Unamortized Nonoperating Investment Tax Credits—
Net, shall be credited with nonoperating investment tax credits generated from qualified expenditures
related to other operations which the company has elected to defer rather than recognize currently in
income.
This account shall be credited and Account 4330, Unamortized Nonoperating Investment Tax Credits—
Net, 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.
7400.2

Nonoperating Federal Income Taxes
This account shall be charged and Account 4070.1, Income Taxes Accrued—Federal, 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 flowthrough 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, 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.

7400.3

Nonoperating State and Local Income Taxes
This account shall be charged and Account 4070.2, Income Taxes Accrued—State and Local, shall be
credited for the amount of nonoperating 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.

7400.4

Nonoperating Other Taxes
This account shall be charged and Account 4080.5, Other Taxes Accrued—Miscellaneous, 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.

7400.5

Provision for Deferred Nonoperating Income Taxes—Net
This account shall be charged or credited, as appropriate, with contra entries recorded in either Account
4110, Net Current Deferred Nonoperating Income Taxes, or Account 4350, Net Noncurrent Deferred
Nonoperating Income Taxes, as appropriate, for nonoperating tax expenses that have been deferred.
Subsidiary record categories shall be maintained to distinguish between property and nonproperty related deferrals and so that the company may separately report the amounts contained herein that relate to Federal, state, and local income taxes.

7600.1

Extraordinary Income Credits
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. Income tax relating to the amounts recorded in this account
shall be recorded in Account 7600.3, Current Income Tax Effect for Extraordinary Items—Net, and
Account 7600.4, Provision for Deferred Income Tax Effect of Extraordinary Items—Net.

7600.2

Extraordinary Income Charges
This account shall be debited with nontypical, noncustomary, and infrequently recurring losses which
would significantly distort the current year’s income computed before such extraordinary items, if reported other than as extraordinary items. Income tax relating to the amounts recorded in this account
shall be recorded in Account 7600.3, Current Income Tax Effect for Extraordinary Items—Net, and
Account 7600.4, Provision for Deferred Income Tax Effect of Extraordinary Items—Net.

7600.3

Current Income Tax Effect of Extraordinary Items—Net

WReier-Aviles on DSKGBLS3C1PROD with CFR

This account shall be charged or credited and Account 4070.1, Income Taxes Accrued—Federal, or Account 4070.2, Income Taxes Accrued—State and Local, shall be credited or charged, as appropriate,
for all current income tax effects (Federal, state, and local) of items included in Account 7600.1, Extraordinary Income Credits, and Account 7600.2, Extraordinary Income Charges.
7600.4

Provision for Deferred Income Tax Effect of Extraordinary Items—Net
This account shall be charged or credited, as appropriate, with a contra amount recorded in Account
4350, Net Noncurrent Deferred Nonoperating Income Taxes, or Account 4110, Net Current Deferred
Nonoperating Income Taxes, for the income tax effects (Federal, state, and local) of items included in
Account 7600.1, Extraordinary Income Credits, and Account 7600.2, Extraordinary Income Charges,
that have been deferred.

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Rural Utilities Service, USDA

§ 1770.16

[55 FR 3388, Feb. 1, 1990; 55 FR 17352, Apr. 24, 1990, as amended at 55 FR 53488, Dec. 31, 1990;
70 FR 25757, May 16, 2005]

§ 1770.16

Supplementary accounts required of nonprofit organizations.

Class of company

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Account No.
A

1350.1
1350.2
1350.3
1350.4

4130.1
4130.2

4270.1
4270.2
4270.3
1350.1

1350.2

1350.3

1350.4

4130.1

4130.2

4270.1

70.1

4270.2

4270.3

Account title

Current Assets
Subscriptions to Capital Stock.
Subscriptions to Memberships.
Subscriptions to Members’ Equity Certificates.
Other Current Assets.
Current Liabilities
Patronage Capital Payable.
Other Current Liabilities—Miscellaneous.
Long-Term Debt
Members’ Redeemable Equity Certificates Subscribed but Unissued.
Members’ Redeemable Equity Certificates Issued.
Other Long-Term Debt.
Subscriptions to Capital Stock
This account shall include the balance due from subscribers upon legally enforceable subscriptions to
capital stock.
The purchase price of subscriptions shall be charged to this account at the time the subscription is received. The par value of the stock subscribed shall be credited to Account 4540.11, Capital Stock
Subscribed, and the difference between the purchase price and the par value shall be credited to Account 4520, Additional Paid-In Capital.
Subscriptions to Memberships
This account shall include the balance due on memberships subscribed. The face amount of memberships subscribed shall be charged to this account at the time the subscription is received. The offsetting credit shall be to Account 4540.12, Memberships Subscribed but Unissued.
A subscription ledger shall be maintained to record for each subscriber, the amount subscribed, payments made, and the balance due. The balance in this account shall be reconciled monthly with the
subscription ledger.
Subscriptions to Members’ Equity Certificates
This account shall include the balance due on member’s equity certificates subscribed. The face
amount of certificates subscribed shall be charged to this account at the time the subscription is received. The offsetting credit shall be to Account 4540.13, Members’ Equity Certificates Subscribed
but Unissued, or to Account 4270.1, Members’ Redeemable Equity Certificates Subscribed but
Unissued.
A subscription ledger shall be maintained to record for each subscriber, the amount subscribed, payments made, and the balance due. The balance in this account shall be reconciled monthly with the
subscription ledger. The subscription ledger shall be maintained in such a manner as to separately
identify redeemable and nonredeemable certificates.
Other Current Assets
This account shall include the amount of all current assets which are not includable in Accounts 1120
through 1350.3.
Patronage Capital Payable
This account shall include the amount of patronage capital which has been authorized to be returned to
patrons.
Other Current Liabilities—Miscellaneous
This account shall include liabilities of current character which are not includable in Accounts 4010
through 4130.1.
Members’ Redeemable Equity Certificates Subscribed but Unissued
This account shall include the face amount of members’ equity certificates which are redeemable at
some specified future date for which subscriptions have been received but for which certificates have
not been issued. This account shall be credited at the time the subscription is received and Account
1350.3, Subscriptions to Members’ Equity Certificates, debited.
This account shall be debited and Account 4270.2, Members’ Redeemable Equity Certificates Issued,
credited when a subscriber has paid the subscription in full and the equity certificates are issued.
Members’ Redeemable Equity Certificates Issued
This account shall include the face amount of outstanding members’ equity certificates which are redeemable at some specified future date. A subsidiary members’ redeemable equity certificate record
shall be maintained to reflect the detail of the balance in this account.
Other Long-Term Debt
This account shall include long-term debt not provided for elsewhere.

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WReier-Aviles on DSKGBLS3C1PROD with CFR

§ 1770.17

7 CFR Ch. XVII (1–1–11 Edition)

§ 1770.17 Expense matrix.
The expense accounts shall be maintained by the following subsidiary
record categories, as appropriate to
each account. Such subsidiary record
categories shall be reported as required
by 47 CFR part 43.
(a) Salaries and wages. This subsidiary
record category shall include compensation to employees, such as wages,
salaries, commissions, bonuses, incentive awards, and termination payments.
(b) Benefits. This subsidiary record
category shall include payroll related
benefits on behalf of employees such as
the following:
(1) Pensions;
(2) Savings plan contributions (company portion);
(3) Worker’s compensation required
by law;
(4) Life, hospital, medical, dental,
and vision plan insurance, and
(5) Social Security and other payroll
taxes.
(c) Rents. (1) 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 Account
6121, Land and Buildings Expense. This
category includes payments for operating leases but does not include payments for capital leases.
(2) 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 (d) of this section) under the account which reflects
the function for which the incidental
rent was incurred.
(d) 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 Account 6512,
Provisioning
Expense);
contracted
services; accident and damage payments, insurance premiums; traveling
expenses and other miscellaneous
costs.
(e) Clearances. This subsidiary record
category shall include amounts transferred to Construction accounts (see 47
CFR 32.2000(c)(2)(iii)), other Plant Spe-

cific Operations Expense accounts and/
or Account 3100, Accumulated Depreciation (cost of removal; see 47 CFR
32.2000(g)(1)(iii)), as appropriate, from
Accounts 6112, Motor Vehicles Expense,
6114, Tools and Other Work Equipment
Expense, 6534, Plant Operations and
Administration Expense, and 6535, Engineering Expense. There shall also be
transfers to Construction or other
Plant Specific Operations Expense accounts, as appropriate, from Account
6512, Provisioning Expense. With respect to these expenses, companies
may establish such clearing accounts
as they deem necessary to accomplish
substantially the same results, provided that within thirty (30) days of
the opening of such accounts, companies shall notify the FCC of the nature
and purpose thereof. Additional clearing accounts affecting other expense
areas may be established with prior approval of the FCC. Should companies
elect, the initial incurred subsidiary
record category identification may be
carried through to the final accounts
without FCC approval.
[70 FR 25757, May 16, 2005]

§§ 1770.18–1770.24

[Reserved]

§ 1770.25 Unusual items and contingent liabilities.
Extraordinary items, prior period adjustments and contingent liabilities
shall be submitted to RUS for review
before being recorded in the company’s
books of account. The materiality of
corrections of errors in prior periods
shall be measured in relation to the
summary account level used for reporting purposes for Class A companies, or
in relation to total operating revenues
or total operating expenses for Class B
companies. For Class A companies, no
correction in excess of one percent of
the aggregate summary account dollars or one million dollars, whichever
is higher, may be recorded in current
operating accounts without prior approval. For Class B companies, no correction which exceeds one percent of
total operating revenues or one percent
of total operating expenses, depending
on the nature of the item, may be recorded in current operating accounts
without prior approval.
[70 FR 25758, May 16, 2005]

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Rural Utilities Service, USDA

Pt. 1770, Subpt. C, App.

Subpart C—Accounting
Interpretations

WReier-Aviles on DSKGBLS3C1PROD with CFR

SOURCE: 61 FR 39847, July 31, 1996, unless
otherwise noted.

RTB is the Rural Telephone Bank.
RUS is the Rural Utilities Service, an
agency of the United States Department of Agriculture, or its predecessor
or successor.

§ 1770.26 General.
(a) The standard provisions of the security instruments utilized by the
Rural Utilities Service (RUS) and the
Rural Telephone Bank (RTB) for all
telecommunications borrowers require
borrowers to at all times keep and safely preserve, proper books, records, and
accounts in which full and true entries
will be made of all of the dealings,
business, and affairs of the borrower in
accordance with the methods and principles of accounting prescribed by the
state regulatory body having jurisdiction over the borrower and by the Federal
Communications
Commission
(FCC) in its Uniform System of Accounts for telecommunications companies (47 CFR part 32), as those methods
and principles of accounting are supplemented from time to time by RUS.
(b) This subpart implements those
standard provisions of the RUS and
RTB security instruments by prescribing accounting principles, methodologies, and procedures applicable to
all telecommunications borrowers for
particular situations.

§§ 1770.28–1770.45

§ 1770.27 Definitions.
As used in this part:
Borrower is an RUS telecommunications borrower.
Cushion of Credit Account is a 5 percent interest bearing account established by RUS in which all voluntary
payments or overpayments on Rural
Electric and Telephone Revolving
Funds after October 1, 1987, are deposited.
FCC is the Federal Communications
Commission.
Part 32 is 47 CFR part 32, Uniform
System of Accounts, issued by the Federal Communications Commission.
RAO is the Responsible Accounting
Officer of the Federal Communications
Commission.
RE Act is the Rural Electrification
Act of 1936, as amended (7 U.S.C. 901 et
seq.).
RETRF is the Rural Electric and
Telephone Revolving Fund.

[Reserved]

APPENDIX TO SUBPART C OF PART 1770—
ACCOUNTING METHODS AND PROCEDURES
REQUIRED OF ALL BORROWERS

All borrowers shall maintain and keep
their books of accounts and all other books
and records which support the entries in
such books of accounts in accordance with
the accounting principles prescribed in this
appendix.
Numerical Index
Number and Title
101
102
103
104
105
106
107
108
109

Postretirement Benefits
Rural Telephone Bank Stock
Cushion of Credit Investments
Rural Economic Development Loan and
Grant Program
Satellite and Cable Television Services
Consolidated Financial Statements
Allowance for Funds Used During Construction
Reporting Comprehensive Income
Disclosures About Pensions and Other
Postretirement Benefits
Subject Matter Index

Number

AFUDC—107.
C
Cable Television Services ............
Comprehensive Income—108.
Consolidated Financial Statements .......................................
Cushion of Credit Investments ....

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106
103

D
Disclosures—109.
E
Economic Development Loan and
Grant Program .........................

104

Financial Statements—Consolidated ........................................

106

Income, Other Comprehensive—
108.
Investments—Cushion of Credit ..

103

O
Other Postretirement Benefits—
109.
P
Pensions—109.
Postretirement Benefits ..............
R

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101

Pt. 1770, Subpt. C, App.

7 CFR Ch. XVII (1–1–11 Edition)

Subject Matter Index

Number

Rural Economic Development
Loan and Grant Program .........
Rural Telephone Bank Stock ......

104
102

Satellite Television Services ......
Stock—Rural Telephone Bank ....

105
102

WReier-Aviles on DSKGBLS3C1PROD with CFR

101

Postretirement Benefits

A. Statement of Financial Accounting
Standards No. 106, Employers’ Accounting
for Postretirement Benefits Other than Pensions (Statement No. 106), requires reporting
entities to accrue the expected cost of postretirement benefits during the years the employee provides service to the entity. For
purposes of applying the provisions of Statement No. 106, members of the board of directors are considered to be employees of the
cooperative. Prior to the issuance of Statement No. 106, most reporting entities accounted for postretirement benefit costs on a
‘‘pay-as-you-go’’ basis; that is, costs were recognized when paid, not when the employee
provided service to the entity in exchange
for the benefits. (Statement 106 is available
from the Financial Accounting Standards
Board, 401 Merritt 7, P.O. Box 5116, Norwalk,
CT. 06856–5116.)
B. As defined in Statement No. 106, a postretirement benefit plan is a deferred compensation arrangement in which an employer
promises to exchange future benefits for an
employee’s current services. Postretirement
benefit plans may be funded or unfunded.
Postretirement benefits include, but are not
limited to, health care, life insurance, tuition assistance, day care, legal services, and
housing subsidies provided outside of a pension plan.
C. Statement No. 106 applies to both written plans and to plans whose existence is implied from a practice of paying postretirement benefits. An employer’s practice of providing postretirement benefits to selected
employees under individual contracts with
specific terms determined on an employeeby-employee basis does not, however, constitute a postretirement benefit plan under
the provisions of this statement.
D. Postretirement benefit plans generally
fall into three categories: single-employer
defined benefit plans, multiemployer plans,
and multiple-employer plans.
E. A single-employer plan is a postretirement benefit plan that is maintained by one
employer. The term may also be applied to a
plan that is maintained by related parties
such as a parent and its subsidiaries. A multiemployer plan is a postretirement benefit
plan in which two or more unrelated employers contribute, usually pursuant to one or
more collective-bargaining agreements. One
characteristic of a multiemployer plan is
that the assets contributed by one partici-

pating employer may be used to provide benefits to employees of other participating employers since assets contributed by an employer are not segregated in a separate account or restricted to provide benefits only
to employees of that employer.
F. A multiple-employer plan is a postretirement benefit plan that is maintained
by more than one employer but is not a multiemployer plan. A multiple-employer plan is
generally not collectively bargained and is
intended to allow participating employers to
pool their plan assets for investment purposes and reduce the cost of plan administration. A multiple-employer plan maintains
separate accounts for each employer so that
contributions provide benefits only for employees of the contributing employer.
G. The accounting requirements set forth
in this interpretation focus on single- and
multiple-employer plans. The accounting requirements set forth in Statement No. 106
for multiemployer plans or defined contribution plans shall be adopted for borrowers
electing those types of plans.
H. Under the provisions of Statement No.
106, there are two components of the postretirement benefit cost: the current period
cost and the transition obligation. The transition obligation is a one-time accrual of the
costs resulting from services already provided. Statement No. 106 allows the transition obligation to be deferred and amortized
on a straight-line basis over the average remaining service period of the active employees. If the average remaining service period
of the active employees is less than 20 years,
a 20-year amortization period may be used.
I. Accounting Requirements
A. All borrowers shall adopt the accrual
accounting provisions and reporting requirements as set forth in Statement No. 106. The
transition obligation and accrual of the current period cost must be based upon an actuarial study. This study must be updated to
allow the borrower to comply with the measurement date requirements of Statement No.
106; however, the study must, at a minimum,
be updated every five years. Borrowers may
not account for postretirement benefits on a
‘‘pay-as-you-go’’ basis.
B. Under the provisions of Statement No.
106, an entity may recognize the transition
obligation, in its entirety, when Statement
No. 106 is first adopted or the entity may
elect to delay the recognition of the transition obligation. On December 26, 1991, however, the FCC issued 6 FCC Rcd 7560, which
requires telecommunications carriers to recognize the transition obligation on a delayed
basis. RUS reviewed this issuance and has
determined that borrowers must comply
with this ruling and recognize the transition
obligation on a delayed basis.
C. The deferral and amortization of the
transition obligation on a delayed basis is

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Rural Utilities Service, USDA

Pt. 1770, Subpt. C, App.

considered to be an off balance sheet item.
As a result, an accounting entry is not required at the time of adoption of Statement
No. 106. Instead, the transition obligation is
recognized as a component of postretirement
benefit cost as it is amortized. The amount
of the unamortized transition obligation
must be disclosed in the notes to the financial statements.
D. In accordance with the provisions of Responsible Accounting Officer (RAO) Letter
20, released by the FCC on April 24, 1992, Account 4310, Other Long-Term Liabilities,
shall be used to record the liability accrued
for postretirement benefits. (RAO Letter 20
is available from the Federal Communications Commission, 1919 M Street, NW., Washington, DC 20554.) Borrowers shall credit this
account for the net periodic cost of postretirement benefits for the current year and
shall debit this account for any fund payments made during the current year.
E. Net periodic postretirement benefit cost
includes current period service cost, interest
cost, return on plan assets, amortization of
prior service cost, gains and losses, and amortization of the transition obligation. If
fund payments create a debit balance in the
postretirement benefits portion of Account
4310, the debit balance applicable to postretirement benefits shall be reported in Account 1410, Other Noncurrent Assets. Account 1410 shall also be used to record any
prepaid postretirement benefit cost.
F. The benefits portion of the expense matrix for the appropriate Part 32 expense accounts shall be used to record the current period service cost component of the current
year’s net periodic postretirement benefit
cost. The interest cost component, return on
plan assets, amortization of prior service
cost, gains and losses, and amortization of
the transition obligation shall be charged to
the benefits portion of the expense matrix of
Account 6728, Other General and Administrative.
II. Effective Date and Implementation
A. For plans outside the United States and
for defined benefit plans of employers that
(a) are nonpublic enterprises and (b) sponsor
defined benefit postretirement plans with no
more than 500 plan participants in the aggregate, Statement No. 106 is effective for fiscal
years beginning after December 15, 1994. For
all other plans, Statement No. 106 is effective for fiscal years beginning after December 15, 1992.

WReier-Aviles on DSKGBLS3C1PROD with CFR

102

Rural Telephone Bank Stock

A. Capital stock issued by the Rural Telephone Bank consists of Class A, Class B, and
Class C stock. Class A stock is issued only to
the Administrator of RUS on behalf of the
United States in exchange for capital furnished to RTB.

B. Class B stock is issued only to recipients of loans under Section 408 of the Rural
Electrification Act (RE Act). Borrowers receiving loan funds pursuant to Section 408(a)
(1) or (2) of the RE Act are required to invest
5 percent of the amount of loan funds approved in Class B stock. No dividends are
payable on Class B stock. All holders of Class
B stock are entitled to patronage refunds in
the form of Class B stock under the terms
and conditions specified in the bylaws of the
RTB.
C. Class C stock is available for purchase
by borrowers, corporations, and public bodies
eligible to borrow under Section 408 of the
RE Act, or by organizations controlled by
such borrowers, corporations and public bodies. The payment of dividends is in accordance with the bylaws of the RTB.
Accounting Requirements
A. The purchase of RTB stock required by
the RE Act shall be debited to Account
1402.1, Investments in Nonaffiliated Companies—Class B RTB Stock. Patronage refunds
in the form of additional shares of RTB Class
B Stock shall be debited to Account 1402.1
and credited to Account 1402.11, Investments
in Nonaffiliated Companies—Class B RTB
Stock—Cr.
B. Purchases of Class C RTB stock shall be
debited to Account 1402.2, Investments in
Nonaffiliated Companies—Class C RTB
Stock. Cash dividends received on Class C
RTB stock shall be credited to Account 7310,
Dividend Income.
C. Once a borrower has repaid all of its
RTB loans, it may request that its Class B
stock be converted to Class C stock. When
the conversion is made, Account 1402.2 shall
be debited and Account 1402.1 shall be credited for the face value of the stock converted. Account 1402.21, Investments in Nonaffiliated Companies—Class C RTB Stock—
Cr., shall be credited and Account 1402.11
shall be debited for the face value of the
Class B stock that has been received as patronage refunds.
103

Cushion of Credit Investments

A. The RUS Cushion of Credit account is
an investment account bearing an interest
rate of 5 percent. All voluntary payments or
overpayments on Rural Electric and Telephone Revolving Fund (RETRF) loans made
after October 1, 1987, are deposited into this
account in the appropriate borrower’s name.
Accounting Requirements
A. The following journal entries shall be
used by RUS borrowers to record the transactions associated with cushion of credit
payment:

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1. Dr. 4210.18, RUS Notes—Advance Payments, Dr. Cr. 1130.1/1120.11, Cash—General Fund. To record the cushion of credit payment.
2. Dr. 4210.18, RUS Notes—Advance Payments, Dr. Cr. 7320/7300.2, Interest Income. To record interest earned on cushion of credit deposits.
3. Dr. 4210.12, RUS Notes, Cr. 4210.18, RUS
Notes—Advance Payments, Dr. To apply
cushion of credit payments (and interest)
to the RUS note.
104

Rural Economic Development Loan and
Grant Program

A. On December 21, 1987, Section 313, Cushion of Credit Payments Program (7 U.S.C. 901
et seq.), was added to the RE Act. Section 313
establishes a Rural Economic Development
Subaccount and authorizes the Administrator of the RUS to provide zero interest
loans or grants to RE Act borrowers for the
purpose of promoting rural economic development and job creation projects. Effective
December 5, 1994, this authority was assigned
to the Administrator, Rural Business and
Cooperative Development Service.
B. 7 CFR part 1703, Subpart B, Rural Economic Development Loan and Grant Program, sets forth the policies and procedures
relating to the zero interest loan program
and for approving and administering grants.

WReier-Aviles on DSKGBLS3C1PROD with CFR

Accounting Requirements
A. The accounting journal entries required
to record the transactions associated with a
Rural Economic Development grant are as
follows:
1. Dr. 1130.4/1120.14, Cash—General Fund—
Economic Development Grant Funds. Cr.
4210.25, RUS Notes—Economic Development Grant; Cr. 4540.41, Other Capital—
Miscellaneous; or Cr. 7360/7300.6, Other
Nonoperating Income. To record grant
funds disbursed by RUS. If the grant
agreement requires repayment of the
funds upon termination of the revolving
loan program, Account 4210.25 shall be
credited. If the grant agreement states
that there is absolutely no obligation for
repayment upon termination of the revolving loan program, the funds shall be
accounted for as a permanent infusion of
capital by crediting Account 4540.41. If,
however, the grant agreement is silent as
to the final disposition of the grant
funds, Account 7360/7300.6 shall be credited.
2. Dr. 1401.1, Other Investments in Affiliated
Companies—Federal Economic Development Grant Loans or Dr. 1402.4, Other Investments in Nonaffiliated Companies—
Federal Economic Development Grant
Loans Cr. 1130.4/1120.14, Cash—General
Fund—Economic
Development
Grant
Funds. To record a Federal revolving

loan to an economic development
project.
3. Dr. 1130.1/1120.11, Cash—General Fund. Cr.
7360/7300.6, Other Nonoperating Income.
To record payment of loan servicing fees
charged to the economic development
project.
4. Dr. 1130.5/1120.15, Cash—General Fund—
Economic Development Non-Federal Revolving Funds. Cr. 1401.1, Other Investments in Affiliated Companies—Federal
Economic Development Grant Loans or
Cr. 1402.4, Other Investments in Nonaffiliated Companies—Federal Economic
Development Grant Loans. To record the
repayment, by the project, of the Federal
revolving loan.
5. Dr. 1401.2, Other Investments in Affiliated
Companies—Non-Federal Economic Development Grant Loans or Dr. 1402.5,
Other Investments in Nonaffiliated Companies—Non-Federal Economic Development Grant Loans. Cr. 1130.5/1120.15,
Cash—General Fund—Economic Development Non-Federal Revolving Funds. To
record a Non-Federal revolving loan to
an economic development project.
6. Dr. 1210, Interest and Dividends Receivable
Cr. 7320/7300.2, Interest Income. To record
the interest earned on a Non-Federal revolving loan to an economic development
project.
7. Dr. 1130.5/1120.15, Cash—General Fund—
Economic Development Non-Federal Revolving Funds. CR. 1401.2, Other Investments in Affiliated Companies—Non-Federal Economic Development Grant Loans
or Cr. 1402.5, Other Investments in Nonaffiliated Companies—Non-Federal Economic Development Grant Loans. To
record the repayment, by the project, of
the Non-Federal revolving loan.
B. The accounting journal entries required
to record the transactions associated with a
Rural Economic Development loan are as
follows:
1. Dr. 4210.26, Economic Development Notes—
Unadvanced, Fr. Cr. 4210.25, Economic
Development Notes. To record the contractual obligation to RUS for the Economic Development Notes.
2. Dr. 1130.6/1120.16, Cash—General Fund—
Economic Development Loan Funds Cr.
4210.26, Economic Development Notes—
Unadvanced, Dr. To record the receipt of
the economic development loan funds.
3. Dr. 1401.3, Other Investments in Affiliated
Companies—Federal Econmic Development Loans or Dr. 1402.6, Other Investments in Nonaffilitated Companies—Federal Economic Development Loans. Cr.
1130.6/1120.16,
Cash—General
Fund—
Ecoomice Development Loan Funds. To
record the discursement of economci development loand funds to the project.
4. Dr. 1130.1/1120.11, Cash—General Fund. Cr.
7360/7300.6, Other Nonoperating Income.

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To record payment of loan servicing fees
charged to the economic development
project.
Dr. 1210, Interest and Dividends Receivable
Cr. 7320/7300.2, Interest Income. To record
the interest earned on the investment of
rural economic development loan funds.
Dr. 7370, Special Charges. Cr. 1130.1, Cash—
General Funds. To record the payment of
interest earned in excess of $500 on the
investment of rural economic development loan funds. NOTE: Interest earned
in excess of $500 must be used for the
rural economic development project for
which the loan funds were received or returned to RUS.
Dr. 1130.6/1120.16, Cash—General Fund—
Economic Development Loan Funds. Cr.
1401.3, Other Investments in Affiliated
Companies—Federal Economic Development Loans or Cr. 1402.6, Other Investments in Nonaffiliated Companies—Federal Economic Development Loans. To
record repayment, by the project, of the
economic development loan.
Dr. 4210.25, Economic Development Notes.
Cr. 1130.6/1120.16, Cash—General Fund—
Economic Development Loan Funds. To
record the repayment, to RUS, of the
economic development loan funds.
105

Satellite and Cable Television Services

A. Many RUS borrowers have become involved in providing either satellite or cable
television services to their members and others through subsidiaries, joint ventures, or
as segments of their current operations.

WReier-Aviles on DSKGBLS3C1PROD with CFR

Accounting Requirements
A. This section outlines the accounting to
be followed when recording transactions involving satellite or cable television services.
1. Separate Subsidiary. If a borrower provides satellite or cable television services
through a separate subsidiary, the investment in the subsidiary shall be debited to
Account 1401, Investments in Affiliated Companies. The net income or loss of the subsidiary shall be debited or credited to Account 1401, as appropriate, with an offsetting
entry to Account 7360, Other Nonoperating
Income.
2. Joint Venture. i. If a borrower provides
satellite or cable television services through
a joint venture, the borrower’s ownership interest dictates the accounting methodology.
If the borrower has less than a 20 percent
ownership interest in the joint venture, the
investment is accounted for under the cost
method of accounting in Account 1402, Investments in Nonaffiliated Companies.
Under the cost method, the joint venture’s
net income or loss is not recorded in the borrower’s records. Income is recognized only to
the extent of any dividends declared by the
joint venture. When a dividend is declared,

the borrower shall debit Account 1210, Interest and Dividends Receivable, and credit Account 7310, Dividend Income. When the dividend is received in cash, the borrower shall
debit Account 1130.1, Cash—General Fund,
and credit Account 1210.
ii. If a borrower has a 20-percent or more
ownership interest in the joint venture, the
investment is accounted for under the equity
method in Account 1401, Investments in Affiliated Companies. The borrower’s proportionate share of the joint venture’s net income or loss shall be debited or credited to
Account 1401, as appropriate, with an offsetting entry to Account 7360, Other Nonoperating Income.
3. Segment of Current Operations. i. If a borrower provides satellite or cable television
service as a segment of its current operations and there are no shared assets between this activity and the regulated telecommunications activities of the borrower,
the investment shall be debited to Account
1406.1, Nonregulated Investments—Permanent Investment. The net income or loss
from providing such service shall be debited
or credited, as appropriate, to Account
1406.3, Nonregulated Investments—Current
Net Income, with an offsetting entry to Account 7990, Nonregulated Net Income.
ii. If a borrower provides satellite or cable
television service as a segment of current operations and shares assets between this activity and the regulated telecommunications
activities of the borrower, the franchise and
application fees shall be debited to a subaccount of Account 2690, Intangibles. The
cost of the satellite or cable television equipment shall be debited to a subaccount of Account 2231, Radio Systems. Revenues earned
from providing satellite or cable service
shall be credited to Account 5280, Nonregulated Operating Revenue, while the associated expenses shall be recorded in a subaccount of the applicable regulated expense
accounts.
4. Sale and Installation of Satellite or Cable
Television Equipment. i. If a borrower sells or
installs satellite or cable television equipment as a segment of its current operations
and there are no shared assets between this
activity and the regulated telecommunications activities of the borrower, the purchase of the equipment shall be debited to
Account 1406.1, Nonregulated Investments—
Permanent Investment. The net income or
loss from providing such services shall be
debited or credited, as appropriate, to Account 1406.3, Nonregulated Investments—
Current Net Income, with an offsetting entry
to Account 7990, Nonregulated Net Income.
ii. If a borrower sells or installs satellite or
cable television equipment as a segment of
its current operations and shares assets between this activity and the regulated telecommunications activities of the borrower,

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the purchase of the equipment shall be debited to Account 1220.2, Property Held for
Sale or Lease. Revenues received for the sale
or installation of the equipment shall be
credited to Account 5280, Nonregulated Operating Revenue, while the associated expenses
shall be debited to a subaccount of the applicable regulated expense accounts.
106

Consolidated Financial Statements

A. In October 1987, FASB issued Statement
of Financial Accounting Standards No. 94,
Consolidation of All Majority-Owned Subsidiaries (Statement No. 94). (Statement 94 is
available from the Financial Accounting
Standards Board, 401 Merritt 7, P.O. Box 5116,
Norwalk, CT 06856–5116.) For purposes of reporting to RUS, Statement No. 94 shall be
applied as follows:
1. A borrower that is a subsidiary of another entity shall prepare and submit to
RUS separate financial statements even
though this financial information is presented in the parent’s consolidated statements.
2. In those cases in which a borrower has a
majority-ownership in a subsidiary, the borrower shall prepare consolidated financial
statements in accordance with the requirements of Statement No. 94. These consolidated statements must also include supplementary schedules presenting a Balance
Sheet and Income Statement for each majority-owned subsidiary included in the consolidated statements.
B. Although Statement No. 94 requires the
consolidation of majority-owned subsidiaries, the RUS Form 479, Financial and Statistical Report for Telecommunications Borrowers, shall be prepared on an unconsolidated basis by all borrowers.

WReier-Aviles on DSKGBLS3C1PROD with CFR

107

Allowance for Funds Used During
Construction

A. Statement of Financial Accounting
Standard No. 34, Capitalization of Interest
Cost, established the standards for capitalizing interest cost as a part of the historical
cost of acquiring certain assets. In order to
capitalize interest, the asset must require a
period of time to complete or to get it ready
for its intended use. This standard applies to
all entities that construct facilities for their
own use and should be applied by RUS Telecommunications borrowers as follows:
1. Only actual interest costs incurred on
external borrowings qualify to be capitalized. The interest rate used to calculate the
amount of interest to be capitalized is based
on the companies external borrowings. If a
construction project is associated with specific debt, the interest rate on that debt is
used to calculate interest cost to be capitalized. If the project is not associated with a
specific debt, a weighted average of the rates
of all existing debt shall be applied to ex-

penditures for the project. There is no materiality threshold for adoption of this standard (47 CFR 32.26).
2. If a borrower is involved in a joint construction project, all determinations as to
the amount of interest incurred and qualified
for capitalization must be based on individual financing arrangements with regard
to the Interest During Construction rules.
3. The capitalization period shall end when
the asset is substantially complete and ready
for its intended use.
Disclosures
A. The following information with respect
to interest cost shall be disclosed in the financial statements or related notes:
1. For an accounting period in which no interest cost is capitalized, the amount of interest cost incurred and charged to expense
during the period.
2. For an accounting period in which some
interest cost is capitalized, the total amount
of interest cost incurred during the period
and the amount thereof that has been capitalized.
108

Reporting Comprehensive Income

A. In June 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income. This statement requires that all items that meet the definition of the components of comprehensive income be reported in the financial statements
for the period in which they are recognized.
Statement 130 establishes a distinction between comprehensive income and other comprehensive income.
1. Comprehensive income is composed of net
income and other comprehensive income. The
net income is the result of operations resulting from the aggregation of revenues, expenses, gains and losses that are not items
that comprise other comprehensive income.
2. Other comprehensive income is composed
of the following:
(a) Foreign currency items,
(b) Minimum pension liability adjustments, and
(c) Unrealized gains and losses on certain
investments in debt and equity securities.
Gains or losses on investment securities included in the net income of the current period that also had been included in other
comprehensive income as unrealized holding
gains or losses in a prior period must be adjusted (called reclassification adjustments)
in the presentation of other comprehensive
income in the current period.
B. Comprehensive income expressed as a formula would be:
Net Income ± items of other comprehensive income = comprehensive income
While Statement 130 requires that comprehensive income should be divided into

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two broad display classifications, net income
and other comprehensive income, it does not
prescribe a specific format for displaying
comprehensive income in the financial statements.
C. RUS Telecommunications borrowers
that present a single Statement of Operations and Patronage Capital should present
the components of other comprehensive income
below the total for net income and then
present the reconciliation of patronage capital (Retained Earnings). Borrowers that
present a separate Statement of Patronage
Capital (or Retained Earnings) should display the beginning balance of patronage capital (or retained earnings), net income for
the period, other items of comprehensive income and total comprehensive income before
the presentation of other items of patronage
capital (or retained earnings) for the period.
109

Disclosures about Pensions and Other
Postretirement Benefits

A. Statement of Financial Accounting
Standards (SFAS) No. 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits, issued in February 1998,
is effective for fiscal years beginning after
December 15, 1998. This statement revises
employers’ disclosure requirements for pension and other postretirement benefit plans.
It does not change the measurement or recognition of those plans. The statement also
permits reduced disclosures for nonpublic entities, which are defined as any entity other
than one:
1. Whose debt or equity securities trade in
a public market either on a domestic or foreign stock exchange or in the over-thecounter market, including securities quoted
only locally or regionally,
2. That makes a filing with a regulatory
agency in preparation for the sale of any
class of debt or equity securities in a public
market, or
3. That is controlled by an entity covered
by 1 or 2 above.

WReier-Aviles on DSKGBLS3C1PROD with CFR

Public Entities and Those Controlled by Public
Entities
A. A commercial RUS Telecommunications borrower that meets the definition of
a public entity and sponsors one or more defined benefit pension or postretirement benefit plan shall provide the following information on a comparative basis for the statements presented:
1. A reconciliation of beginning and ending
balances of the benefit obligation showing
separately, if applicable, the effects during
the period attributable to each of the following:
(a) Service cost,
(b) Interest cost,
(c) Contributions by plan participants,
(d) Actuarial gains and losses,

(e) Foreign currency exchange rate
changes,
(f) Benefits paid,
(g) Plan amendments,
(h) Business combinations,
(i) Divestitures,
(j) Curtailments,
(k) Settlements, and
(l) Special termination benefits.
2. A reconciliation of beginning and ending
balances of the fair value of plan assets
showing separately, if applicable, the effects
during the period attributable to each of the
following:
(a) Actual return on plan assets,
(b) Foreign currency exchange rate
changes,
(c) Contributions by the employer,
(d) Contributions by plan participants,
(e) Benefits paid,
(f) Business combinations,
(g) Divestitures, and
(h) Settlements.
3. The funded status of the plans, the
amounts not recognized in the statement of
financial position, and the amounts recognized in the statement of financial position,
including:
(a) The amount of any unamortized prior
service cost.
(b) The amount of any unrecognized net
gain or loss (including asset gains and losses
not yet reflected in market-related value).
(c) The amount of any remaining
unamortized, unrecognized net obligation or
net asset existing at the initial date of application of SFAS No. 87, Employers’ Accounting for Pensions, or SFAS No. 106, Employers’ Accounting for Postretirement Benefits
Other Than Pensions.
(d) The net pension or other postretirement benefit prepaid assets or accrued liabilities.
(e) Any intangible asset and the amount of
accumulated other comprehensive income
recognized pursuant to paragraph 37 of SFAS
No. 87, as amended.
4. The amount of net periodic benefit cost
recognized, showing separately:
(a) The service cost component,
(b) The interest cost component,
(c) The expected return on plan assets for
the period,
(d) The amortization of the unrecognized
transition obligation or transition asset,
(e) The amount of recognized gains and
losses, the amount of prior service cost recognized, and
(f) The amount of gain or loss recognized
due to a settlement or curtailment.
5. The amount included within other comprehensive income for the period arising
from a change in the additional minimum
pension liability recognized pursuant to
paragraph 37 of SFAS No. 87, as amended.

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7 CFR Ch. XVII (1–1–11 Edition)

6. On a weighted-average basis, the following assumptions used in the accounting
for the plans:
(a) Assumed discount rate,
(b) Rate of compensation increase (for payrelated plans), and
(c) Expected long-term rate of return on
plan assets.
7. The assumed health care cost trend
rate(s) for the next year used to measure the
expected cost of benefits covered by the plan
(gross eligible charges) and a general description of the direction and pattern of
change in the assumed trend rates thereafter, together with the ultimate trend
rate(s) and when that rate is expected to be
achieved.
8. The effect of a one-percentage-point increase and the effect of a one-percentagepoint decrease in the assumed health care
cost trend rates on (for purposes of this disclosure, all other assumptions shall be held
constant, and the effects shall be measured
based on the substantive plan that is the
basis for the accounting):
(a) The aggregate of the service and interest cost components of net periodic postretirement health care benefit cost, and
(b) The accumulated postretirement benefit obligation for health care benefits.
9. If applicable, the amounts and types of
securities of the employer and related parties included in plan assets, the approximate
amount of future annual benefits of plan participants covered by insurance contracts
issued by the employer or related parties,
and any significant transactions between the
employer or related parties and the plan during the period.
10. If applicable, any alternative amortization method used to amortize prior service
amounts or unrecognized net gains and
losses pursuant to paragraphs 26 and 33 of
SFAS No. 87 or paragraphs 53 and 60 of SFAS
No. 106.
11. If applicable, any substantive commitment, such as past practice or a history of
regular benefit increases, used as the basis
for accounting for the benefit obligation.
12. If applicable, the cost of providing special or contractual termination benefits recognized during the period and a description
of the nature of the event.
13. An explanation of any significant
change in the benefit obligation or plan assets not otherwise apparent in the other disclosures.
B. RUS Telecommunications borrowers
that sponsor two or more pension or postretirement plans may aggregate the required
disclosures. If the disclosures are aggregated,
the aggregate benefit obligation and aggregate fair value of plan assets for plans with
benefit obligations in excess of plan assets
must be disclosed.
C. RUS Telecommunications borrowers
sponsoring defined contribution plans shall

disclose the amount of cost recognized for
defined contribution pension or other postretirement benefit plans during the period
separately from the amount of cost recognized for defined benefit plans. The disclosures shall include a description of the nature and effect of any significant changes
during the period affecting comparability,
such as a change in the rate of employer contributions, a business combination, or a divestiture.
Nonpublic Entities
A. RUS commercial and cooperative type
borrowers that meet the definition of a nonpublic entity, as previously defined, may
elect to meet the following reduced disclosure requirements:
1. The benefit obligation.
2. Fair value of plan assets.
3. Funded status of the plan.
4. Employer contributions.
5. Participant contributions.
6. Benefits paid.
7. The amounts recognized in the statement of financial position, including the net
pension and other postretirement benefit
prepaid assets or accrued liabilities and any
intangible asset and the amount of accumulated other comprehensive income recognized pursuant to paragraph 37 of SFAS No.
87, as amended.
8. The amount of net periodic benefit cost
recognized and the amount included within
other comprehensive income arising from a
change in the minimum pension liability
recognized pursuant to paragraph 37 of SFAS
No. 87, as amended.
9. On a weighted-average basis, the following assumptions used in the accounting
for the plans: Assumed discount rate, rate of
compensation increase (for pay-related
plans), and expected long-term rate of return
on plan assets.
10. The assumed health care cost trend
rate(s) for the next year used to measure the
expected cost of benefits covered by the plan
(gross eligible charges) and a general description of the direction and pattern of
change in the assumed trend rates thereafter, together with the ultimate trend
rate(s) and when that rate is expected to be
achieved.
11. If applicable, the amounts and types of
securities of the employer and related parties included in plan assets, the approximate
amount of future annual benefits of plan participants covered by insurance contracts
issued by the employer or related parties,
and any significant transactions between the
employer or related parties and the plan during the period.
12. The nature and effect of significant
nonroutine events, such as amendments,
combinations, divestitures, curtailments,
and settlements.

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B. The majority of RUS Telecommunications borrowers will fall within the definition of nonpublic entities with exception of
those held by publicly traded holding companies.
Multiemployer Plans
A. An RUS Telecommunications borrower
shall disclose the amount of contributions to
multiemployer plans during the period. The
borrower may disclose total contributions to
multiemployer plans without disaggregating
the amounts attributable to pensions and
other postretirement benefits. The disclosures shall include a description of the nature and effect of any changes affecting comparability, such as a change in the rate of
employer contributions, a business combination, or a divestiture.
B. In some cases, withdrawal from a multiemployer plan results in an obligation to the
plan for a portion of the plan’s unfunded accumulated postretirement benefit obligation. If it is either probable or reasonably
possible that (a) an employer would withdraw from the plan under circumstances that
would give rise to an obligation or (b) an employer’s contribution to the fund would be
increased during the remainder of the contract period to make up a shortfall in the
funds necessary to maintain the negotiated
level of benefit coverage, the employer shall
apply the provisions of SFAS No. 5, Accounting for Contingencies.

WReier-Aviles on DSKGBLS3C1PROD with CFR

DISCLOSURE MATRIX

Change in benefit obligation:
Benefit obligation beginning of
year ........................................
Service Cost ..............................
Interest Cost ..............................
Actuarial Gain ............................
Plan Amendments .....................
Benefits Paid .............................
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets beginning of year ............................
Actual return on plan assets .....
Employer Contribution ...............
Contributions by plan participants ......................................
Benefits Paid .............................
Fair value of plan assets at end
of year ....................................
Funded status:
Unrecognized net actuarial loss
(gain) ......................................
Unamortized prior service cost ..
Unrecognized transition obligation .........................................
Prepaid (Accrued) benefit cost ..
Weighted-average assumptions
as of December 31:
Discount rate .............................
Expected return on plan assets
Rate of compensation increase

Public
entities

Nonpublic
entities

X
X
X
X
X
X
X

....................
....................
....................
....................
....................
....................
X

X
X
X

....................
....................
X

X
X

X
X
X

DISCLOSURE MATRIX—Continued

Components of net periodic
benefit cost:
Service cost ...............................
Interest cost ...............................
Expected return on plan assets
Amortization of prior service
cost ........................................
Amortization of transition obligation .........................................
Recognized net actuarial loss ...
Net periodic benefit cost ...........

Public
entities

Nonpublic
entities

X
X
X

....................
....................
....................

X
X
X

[61 FR 39847, July 31, 1996, as amended at 70
FR 25758, May 16, 2005]

PART 1773—POLICY ON AUDITS OF
RUS BORROWERS
Subpart A—General Provisions
Sec.
1773.1
1773.2

General.
Definitions.

Subpart B—RUS Audit Requirements
1773.3 Annual audit.
1773.4 Borrower responsibilities.
1773.5 Qualifications of CPA.
1773.6 Auditor communication.
1773.7 Audit standards.
1773.8 Audit date.
1773.9 Disclosure of fraud, illegal acts, and
other noncompliance.
1773.10 Access to audit-related documents.
1773.11–1773.19 [Reserved]

Subpart C—RUS Requirements for the Submission and Review of the Auditor’s
Report, Report on Compliance and on
Internal Control Over Financial Reporting, and Management Letter
1773.20 CPA’s submission of the auditor’s report, report on compliance, report on
compliance and on internal controls over
financial reporting, and management letter.
1773.21 Borrower’s review and submission of
the auditor’s report, report on compliance and on internal control over financial reporting, and management letter.
1773.22–1773.29 [Reserved]

Subpart D—RUS Reporting Requirements
1773.30 General.
1773.31 Auditor’s report.
1773.32 Report on compliance and on internal control over financial reporting.
1773.33 Management letter.
1773.34–1773.37 [Reserved]

235

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