18 Cfr 352

SUBCHAPTER Q—ACCOUNTS UNDER THE INTERSTATE
COMMERCE ACT
PART 351—FINANCIAL STATEMENTS
RELEASED BY CARRIERS
AUTHORITY: Department of Energy Organization Act, (42 U.S.C. 7101 et seq.) E.O. 12009,
42 FR 46267, Interstate Commerce Act, as
amended, (49 U.S.C. 1 et seq).

§ 351.1 Financial statements released
by carriers.
Carriers desiring to do so may prepare and publish financial statements
in reports to stockholders and others,
except in reports to this Commission,
based on generally accepted accounting
principles for which there is authoritative support, provided that any variance from this Commission’s prescribed accounting rules contained in
such statements is clearly disclosed in
footnotes to the statements.
[Order 119, 46 FR 9044, Jan. 28, 1981]

PART 352—UNIFORM SYSTEMS OF
ACCOUNTS PRESCRIBED FOR OIL
PIPELINE COMPANIES SUBJECT
TO THE PROVISIONS OF THE
INTERSTATE COMMERCE ACT

1–15

Accounting for marketable equity securities owned.
1–16 Accounting for inaccurate reporting of
income taxes on income from continuing
operations which occurred prior to reporting year 1979.
INSTRUCTIONS FOR BALANCE SHEET ACCOUNTS
2–1 Current assets.
2–2 Investments and special funds.
2–3 Tangible property.
2–4 Other assets and deferred charges.
2–5 Current liabilities.
2–6 Noncurrent liabilities.
2–7 Contingent assets and liabilities.
INSTRUCTIONS FOR CARRIER PROPERTY
ACCOUNTS
3–1
3–2
3–3
3–4
3–5
3–6
3–7
3–8
3–9
3–10
3–11

Property acquired.
[Reserved]
Cost of property constructed.
Additions.
Improvements.
Replacements.
Retirements.
Salvage.
Relocation of line.
Property contributed.
Acquisition by merger, consolidation
or purchase.
3–12 Reorganizations.
3–13 Disposition of former Account 193, Acquisition Adjustment.
INSTRUCTIONS FOR OPERATING REVENUES AND
OPERATING EXPENSES

LIST OF INSTRUCTIONS AND ACCOUNTS
Definitions.

WReier-Aviles on DSKGBLS3C1PROD with CFR

GENERAL INSTRUCTIONS
Sec.
1–1 Classification of accounts.
1–2 Records.
1–3 Accounting period.
1–4 Accounting method.
1–5 Delayed items.
1–6 Extraordinary, unusual or infrequent
items, prior period adjustments, discontinued
operations
and
accounting
changes.
1–7 Items in texts of accounts.
1–8 Depreciation accounting—Carrier property.
1–9 Depreciation
accounting—Noncarrier
property.
1–10 Amortization of intangibles.
1–11 Interpretation of rules.
1–12 Accounting for income taxes.
1–13 Transactions with affiliated companies.
1–14 Charges to be just and reasonable.

4–1
4–2
4–3
4–4
4–5

Detail of accounts.
Operating revenues.
Operating expenses.
Expense classification.
Expense distribution.
BALANCE SHEET ACCOUNTS

10 Cash.
10–5 Special deposits.
11 Temporary investments.
12 Notes receivable.
13 Receivables from affiliated companies.
14 Accounts receivable.
14–5 Accumulated
provision
for
uncollectible accounts.
15 Interest and dividends receivable.
16 Oil inventory.
17 Material and supplies.
18 Prepayments.
19 Other current assets.
19–5 Deferred income tax assets.
20 Investments in affiliated companies.
21 Other investments.
22 Sinking and other funds.
23 Reductions in security values—Credit.

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Federal Energy Regulatory Commission
24

Allowance for net unrealized loss on noncurrent marketable equity securities—
Credit.
30 Carrier property.
31 Accrued depreciation—Carrier property.
32 Accrued amortization—Carrier property.
33 Operating oil supply.
34 Noncarrier property.
35 Accrued depreciation—Noncarrier property.
40 Organization costs and other intangibles.
41 Accrued amortization of intangibles.
43 Miscellaneous other assets.
44 Other deferred charges.
45 Accumulated deferred income tax assets.
50 Notes payable.
51 Payables to affiliated companies.
52 Accounts payable.
53 Salaries and wages payable.
54 Interest payable.
55 Dividends payable.
56 Taxes payable.
57 Long-term debt payable within one year.
58 Other current liabilities.
59 Deferred income tax liabilities.
60 Long-term debt payable after one year.
61 Unamortized premium on long-term
debt.
62 Unamortized discount and interest on
long-term debt.
63 Other noncurrent liabilities.
64 Accumulated deferred income tax liabilities.
70 Capital stock.
71 Premiums on capital stock.
72 Capital stock subscriptions.
73 Additional paid-in capital.
74 Appropriated retained income.
75 Unappropriated retained income.
75.5 Net unrealized loss on noncurrent marketable equity securities.
76 Treasury stock.
CARRIER PROPERTY ACCOUNTS

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101,
102,
103,
104,
105,
106,
107,
108,
109,
110,
111,
112,
113,
114,
115,

151, 171 Land.
152 Right of way.
153 Line pipe.
154 Line pipe fittings.
155 Pipeline construction.
156, 176 Buildings.
157 Boilers.
158 Pumping equipment.
159, 179 Machine tools and machinery.
160 Other station equipment.
161 Oil tanks.
162 Delivery facilities.
163, 183 Communication systems.
164, 184 Office furniture and equipment.
165, 185 Vehicles and other work equipment.
116, 166, 186 Other property.
187 Construction work in progress.
OPERATING REVENUES
200
210

Pt. 352
220 Delivery revenues.
230 Allowance oil revenue.
240 Storage and demurrage revenue.
250 Rental revenue.
260 Incidental revenue.
OPERATING EXPENSES
OPERATIONS AND MAINTENANCE
300
310
320
330
340
350
390

Salaries and wages.
Materials and supplies.
Outside services.
Operating fuel and power.
Oil losses and shortages.
Rentals.
Other expenses.
GENERAL

500 Salaries and wages.
510 Materials and supplies.
520 Outside services.
530 Rentals.
540 Depreciation and amortization.
550 Employee benefits.
560 Insurance.
570 Casualty and other losses.
580 Pipeline taxes.
590 Other expenses.
INCOME ACCOUNTS
ORDINARY ITEMS
CREDIT
600
620
630
640
645

Operating revenues.
Income (net) from noncarrier property.
Interest and dividend income.
Miscellaneous income.
Unusual or infrequent items (credit).
DEBIT

610 Operating expenses.
650 Interest expense.
660 Miscellaneous income charges.
665 Unusual or infrequent items (debit).
670 Income taxes on income from continuing operations.
671 Provision for deferred taxes.
DISCONTINUED OPERATIONS
675

Income (loss) from operations of discontinued segments.
676 Gain (loss) on disposal of discontinued
segments.
EXTRAORDINARY ITEMS AND ACCOUNTING
CHANGES
680 Extraordinary items (net).
695 Income taxes on extraordinary items.
696 Provision for deferred taxes—extraordinary items.
697 Cumulative effect on changes in accounting principles.
RETAINED INCOME ACCOUNTS

Gathering revenues.
Trunk revenues.

700

Net balance transferred from income.

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Pt. 352
705
710
720
740
750
797
798
799

18 CFR Ch. I (4–1–11 Edition)

Prior period adjustments to beginning
retained income account.
Other credits to retained income.
Other debits to retained income.
Appropriations of retained income.
Dividend appropriations of retained income.
Form of balance sheet statement.
Form of income statement.
Form of unappropriated retained income statement.

AUTHORITY: 49 U.S.C. 60502; 49 App. U.S.C.
1–85 (1988).
SOURCE: 32 FR 20241, Dec. 20, 1967, unless
otherwise noted. Redesignated by Order 119,
46 FR 9044, Jan. 28, 1981.

WReier-Aviles on DSKGBLS3C1PROD with CFR

LIST OF INSTRUCTIONS AND ACCOUNTS
Definitions. Definitions of terms used
in this system of accounts:
1. Accounts means the accounts prescribed in this system of accounts.
2. Actually issued, as applied to securities issued or assumed by the carrier,
means those which have been sold to
bona fide purchasers or holders for a
valuable consideration, those issued in
exchange for other securities or other
property, and those issued as dividends
on stock; and the purchasers or holders
secured them free from control by the
carrier.
3. Actually outstanding, as applied to
securities issued or assumed by the carrier, means those which have been actually issued and are neither retired nor
held by or for the carrier.
4. Additions means facilities, equipment, and structures added to existing
property exclusive of replacements.
5. Affiliated companies means companies or persons that directly, or indirectly
through
one
or
more
intermediairies, control, or are controlled by, or are under common control with, the accounting carrier.
6. Amortization means the gradual extinguishment of an amount in an account by distributing such amount
over a fixed period, over the life of the
asset or liability to which it applies, or
over the period during which it is anticipated the benefit will be realized.
7. Book cost means the amount at
which assets are recorded in the accounts without deduction of related
provisions for accrued depreciation,
amortization, or for other purposes.

8. Carrier means a common carrier by
pipeline subject to the Interstate Commerce Act.
9. Commission means the Federal Energy Regulatory Commission.
10. Control (including the terms controlling, controlled by, and under common
control with) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a company,
whether such power is exercised
through one or more intermediary
companies, or alone, or in conjunction
with, or pursuant to an agreement, and
whether such power is established
through a majority or minority ownership or voting of securities, common
directors, officers or stockholders, voting trusts, holding trusts, associated
companies, contract or any other direct or indirect means. When there is
doubt about an existence of control in
any particular situation, the carrier
shall report all pertinent facts to the
Commission for determination.
11. Cost means the amount of money
actually paid for property or services
or the current cash value of the consideration given when it is other than
money.
12. Cost of removal means cost of demolishing, dismantling, tearing down,
or otherwise removing property including costs of handling and transportation. It does not include the cost of
removal activities associated with
asset retirement obligations that are
capitalized as part of the tangible longlived assets that give rise to the obligation. (See General Instruction 1–19).
13. Date of retirement means the date
that property is withdrawn from service.
14. Debt expense means all expense in
connection with the issuance and sale
of evidences of debt, such as fees for
drafting mortgages and trusts; fees and
taxes for issuing or recording evidences
of debt; cost of engraving and printing
bonds, certificates of indebtedness, and
other evidences of debt; fees paid to
trustees; specific costs of obtaining
governmental authority; fees for legal
services; fees and commissions paid underwriters, brokers, and salesmen for
marketing evidences of debt; fees and
expenses of listing on exchanges; and
other like costs.

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Federal Energy Regulatory Commission
15. Depreciation means the loss in
service value not restored by current
maintenance and incurred in connection with the consumption or prospective retirement of property in the
course of service from causes against
which the carrier is not protected by
insurance, and the effect of which can
be forecast with a reasonable approach
to accuracy.
16. Discount, as applied to securities
issued or assumed by the carrier,
means the excess of the par or face
value of the securities plus interest or
dividends accrued at the date of the
sale over the cash value of the consideration received from their sale.
17. Group plan means the plan under
which depreciation charges are computed on the book cost of all property
included in each depreciable account
by application of a composite rate of
depreciation based on the weighted average service lives of such property.
18. Improvements means alterations or
changes in structural design of property which result in increased service
life or efficiency.
19. Minor items of property means the
associated parts or items of which
units of property are composed.
20. Net salvage value means salvage
value of property retired less the cost
of removal.
21. Nominally issued, as applied to securities issued or assumed by the carrier, means those which have been
signed, certified, or otherwise executed, and placed with the proper officer for sale and delivery, or pledged, or
otherwise placed in some special fund
of the accounting company.
22. Nominally outstanding, as applied
to securities issued or assumed by the
carrier, means those which, after being
actually issued, have been reacquired
by or for the accounting company
under such circumstances which require them to be considered as held
alive and not retired and canceled.
23. Premium, as applied to securities
issued or assumed by the carrier,
means the excess of the cash value of
the consideration received from their
sale over the sum of their par (stated
value of no-par stocks) or face value
and interest or dividends accrued at
the date of sale.

Pt. 352
24. Property retired means units of
property which have been removed,
sold, abandoned, destroyed, or which
for any cause have been withdrawn
from service; also, minor items of property not replaced.
25. Replacement means the substitution of a part or of a complete unit of
property with a new part or unit.
26. Salvage value means the amount
received or estimated to be received for
property retired less any expenses incurred in connection with the sale or
preparing the property for sale; or, if
retained, the value at which the recovered material is chargeable to the material and supplies account or other appropriate account.
27. Service life means the period between the date that property is placed
in service and the date of its retirement.
28. Service value means the book cost
less the actual or estimated net salvage value of property.
29. Straight-line method, as applied to
depreciation and amortization accounting, means the plan under which
the service value of property is charged
to expense and credited to the related
accrued depreciation or amortization
account
through
equal
monthly
charges during the service life of the
property.
30. (a) Income taxes means taxes based
on income determined under provisions
of the United States Internal Revenue
Code and foreign, state and other taxes
(including franchise taxes) based on income.
(b) Income tax expense means the
amount of income taxes (whether or
not currently payable or refundable)
allocable to a period in the determination of net income.
(c) Pretax accounting income means income or loss for a period, exclusive of
related income tax expense.
(d) Taxable income means the excess
of revenues over deductions or the excess of deductions over revenues to be
reported for income tax purposes for a
period.
(e) ‘‘Temporary difference’’ means a
difference between the tax basis of an
asset or liability and its reported
amount in the financial statements
that will result in taxable or deductible

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Pt. 352

18 CFR Ch. I (4–1–11 Edition)

amounts in future years when the reported amount of the asset or liability
is recovered or settled, respectively.
Some events recognized in financial
statements do not have tax consequences. Certain revenues are exempt from taxation and certain expenses are not deductible. Events that
do not have tax consequences do not
give rise to temporary differences.
(f)
‘‘Deductible
temporary
difference’’ means temporary differences
that result in deductible amounts in
future years when the related asset or
liability is recovered or settled, respectively.
(g) ‘‘Deferred tax asset’’ means the
deferred tax consequences attributable
to deductible temporary differences
and carryforwards. A deferred tax asset
is measured using the applicable enacted tax rate and provisions of the enacted tax law. A valuation allowance
should be recognized if it is more likely
than not (a likelihood of more than 50
percent) that some portion or all of the
deferred tax asset will not be realized.
(h) ‘‘Deferred tax liability’’ means
the deferred tax consequences attributable to taxable temporary differences. A deferred tax liability is
measured using the applicable enacted
tax rate and provisions of the enacted
tax law.
(i) Interperiod tax allocation means the
process of apportioning income taxes
among periods.
(j) ‘‘Tax allocation within a period’’
means the process of allocating income
tax expense applicable to a given period among continuing operations, discontinued operations, extraordinary
items, and items charged or credited
directly to shareholders’ equity.
31. (a) Investor means a business entity that holds an investment in voting
stock of another company.
(b) Investee means a corporation that
issued voting stock held by an investor.
(c) Corporate joint venture is a company owned and operated by a small
group of businesses as a separate and
specific business or project for the mutual benefit of the members of the
group.
(d) Dividends, unless otherwise specified, means dividends paid or payable
in cash, other assets, or another class

of stock and does not include stock
dividends or stock splits.
(e) Earnings or losses of an investee and
financial position of an investee refer to
net income (or net loss) and financial
position of an investee determined in
accordance with generally accepted accounting principles.
(f) Undistributed earnings of an
investee means net income less dividends declared whether received or not.
(g) Date of acquisition is the date on
which the investor assumes the rights
of ownership. Ordinarily this is the
date assets are received and other assets are given or securities issued.
32. (a) Segment of a business refers to
a component of an entity whose activities represent a separate major line of
business or class of customer. A segment may be in the form of a subsidiary, a division, or a department,
and in some cases a joint venture or
other nonsubsidiary investee, provided
that its assets, results of operations,
and activities can be clearly distinguished, physically and operationally
and for financial reporting purposes,
from the other assets, results of operations, and activities of the entity. The
fact that the results of operations of
the segment being sold or abandoned
cannot be separately identified strongly suggests that the transaction should
not be classified as a segment of business.
(b) Measurement date means the date
on which the management having authority to approve the action commits
itself to a formal plan to dispose of a
segment of the business, whether by
abandonment or sale. The measurement date for disposals requiring Commission approval shall be the service
date of the Order authorizing the disposal.
(c) Disposal date refers to the date of
closing the sale if the disposal is by
sale or the date that operations cease if
the disposal is by abandonment.
33. Compensating balance means the
portion of any demand deposit (or any
time deposit or certificate of deposit)
maintained by a carrier (or by any person on behalf of the carrier) which constitutes support for existing borrowing
arrangements of the carrier (or any
person) with a lending institution.

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Federal Energy Regulatory Commission
Such arrangements include both outstanding borrowings and the assurance
of future credit availability. (The compensating balance requirement should
be adjusted by the amount of float unless such adjustment would cause the
compensating balance to be greater
than the cash balance per carrier’s
books. The float adjustment is made by
subtracting the float from the compensating balance requirement if the collected bank ledger balance exceeds the
cash balance per carrier’s books or by
adding the float to the compensating
balance requirement if the collected
bank ledger balance is less than the
cash balance per carrier’s books.)
34. Float means deposits and withdrawals in transit which constitute a
difference between the collected bank
ledger balance and the cash balance per
carrier’s books.
35. (a) Equity security encompasses
any instrument representing ownership
shares (e.g., common, preferred, and
other capital stock), or the right to acquire (e.g., warrants, rights, and call
options) or dispose of (e.g., put options)
ownership shares in an enterprise at
fixed or determinable prices. The term
does not encompass preferred stock
that by its terms either must be redeemed by the issuing enterprise or is
redeemable at the option of the investor, nor does it include treasury stock
or convertible bonds.
(b) Marketable, as applied to an equity security, means an equity security
as to which sales prices or bid and ask
prices are currently available on a national securities exchange (i.e., those
registered with the Securities and Exchange Commission) or in the over-thecounter market. In the over-thecounter market, an equity security
shall be considered marketable when a
quotation is publicly reported by the
National Association of Securities
Dealers Automatic Quotations System
or by the National Quotations Bureau,
Inc. (Provided, in the later case, That
quotations are available from at least
three dealers.) Equity securities traded
in foreign markets shall be considered
marketable when such markets are of a
breadth and scope comparable to those
referred to above. This definition is not
met by restricted stock (securities for
which sale is restricted by a govern-

Pt. 352
mental or contractual requirement except where such requirement terminates within one year or where the
holder has the power to cause the requirement to be met within one year).
Any portion of the stock which can
reasonably be expected to qualify for
sale within one year, such as may be
the case under Rule 144 or similar rules
of the Securities and Exchange Commission, is not considered restricted.
(c) Market value refers to the aggregate of the market price of a single
share or unit times the number of
shares or units of each marketable equity security in the portfolio. When an
entity has taken positions involving
short sales, sales of calls, and purchases of puts for marketable equity
securities and the same securities are
included in the portfolio, those contracts shall be taken into consideration in the determination of market
value of the marketable equity securities.
(d) Cost, as applied to a marketable
equity security, refers to the original
cost as adjusted for unrealized holding
gains and losses.
[32 FR 20241, Dec. 20, 1967, as amended at 37
FR 17713, Aug. 31, 1972; 39 FR 33343, Sept. 17,
1974; 39 FR 34043, Sept. 23, 1974; 40 FR 53247,
Nov. 17, 1975; 41 FR 9158, Mar. 3, 1976; 42 FR
33297, June 30, 1977. Redesignated and amended by Order 119, 46 FR 9044, Jan. 28, 1981;
Order 620, 65 FR 81342, Dec. 26, 2000; Order 627,
67 FR 67706, Nov. 6, 2002; Order 631, 68 FR
19625, Apr. 21, 2003]

GENERAL INSTRUCTIONS
1–1 Classification of accounts. Accounts are prescribed to record the cost
of property used in transportation and
related operations and for revenues, expenses, taxes, rents, and other items of
income for such operations. Separate
accounts are prescribed for cost of
property not used in transportation operations and for income and expenses
pertaining thereto; for other investments and related income; for extraordinary and prior period items, including applicable income taxes; and for assets and liabilities.
In addition, stockholders’ equity accounts, designed to segregate directly
contributed capital from appropriated
and unappropriated retained income,

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Pt. 352

18 CFR Ch. I (4–1–11 Edition)

are provided. Retained income accounts form the connecting link between the income account and the equity section of the balance sheet. They
are provided to record the transfer of
net income or loss for the year; certain
capital transactions; and, when authorized by the Commission, other items.
1–2 Records. (a) Carriers shall keep
their accounts and records in accordance with the prescribed accounts. In
addition, clearing accounts, temporary
accounts, and subdivisions of any account may be kept provided the integrity of the prescribed accounts is not
impaired. Each carrier shall keep its
books of account, and all other books,
records and memoranda which support
the entries in such books of account, so
as to be able to furnish readily full information as to any item included in
any account. Each entry shall be supported by such detailed information as
will permit ready identification, analysis, and verification of all facts relevant thereto.
(b) The books and records referred to
herein include not only accounting
records in a limited technical sense,
but all records, such as minute books,
stock books, reports, correspondence,
memorandums, etc., which may be useful in developing the history of or facts
regarding any transaction.
(c) No carrier shall destroy any
books, records, memoranda, etc., which
support entries to its accounts unless
destruction is permitted by the regulations
governing
preservation
of
records, Part 356 of this chapter.
(49 U.S.C. 5b, 304, 320, 904, 913, 917,
1003, 1012)

WReier-Aviles on DSKGBLS3C1PROD with CFR

[32 FR 20241, Dec. 20, 1967, as amended at 40
FR 50384, Oct. 29, 1975. Redesignated and
amended by Order 119, 46 FR 9044, Jan. 28,
1981]

1–3 Accounting period. (a) Each carrier
shall keep its books on a monthly basis
so that all transactions, as nearly as
may be ascertained, shall be entered in
the accounts not later than 60 days
after the last day of the period for
which the accounts are stated, except
that the time within which the final
entries for the year ending December 31
shall be made may be extended to such
date in the following March as shall
not interfere with the preparation and
filing of the annual report.

(b) Changes shall not be made in the
accounts for periods covered by reports
that have been filed with the Commission unless the changes have first been
authorized by the Commission.
1–4 Accounting method. (a) This system of accounts shall be kept by the
accrual method of accounting. The
basis used for accruing income and expense items each month shall be consistently applied and any change in
such basis or any unusual accruals involving material amounts shall be
promptly reported to the Commission.
(b) When the amount of any transaction cannot be accurately determined in time for inclusion in the applicable month’s accounts, an estimated amount shall be entered in the
proper accounts. Appropriate adjustments shall be made as soon as the actual amounts become known or at the
time a substantial change is indicated.
Carriers are not required to anticipate
minor items which do not appreciably
affect the accounts.
1–5 Delayed items. Ordinary delayed
items and adjustments arising during
the current year which are applicable
to prior years shall be included in the
same account which would have been
charged or credited if the item had
been taken up or the adjustments made
in the year to which it pertained. When
the amount of a delayed item or adjustment is relatively so large that its
inclusion in net income for a single
month would seriously distort the accounts for the month (but not for the
year), such amount may be distributed
in equal monthly charges or credits, as
the case may be, to the remaining
months of the calendar year. See instruction 1–6 for instructions covering
extraordinary and prior period items of
a nonrecurring nature.
1–6 Extraordinary, unusual or infrequent items, prior period adjustments, discontinued operations and accounting
changes. (a) Extraordinary Items. All
items of profit and loss recognized during the year are includible in ordinary
income unless evidence clearly supports their classification as extraordinary items. Extraordinary items are
characterized by both their unusual nature and infrequent occurrence taking
into account the environment in which

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Federal Energy Regulatory Commission
the firm operates; they must also meet
the materiality standard.
Unusual means the event or transaction must possess a high degree of
abnormality and be of a type clearly
unrelated to, or only incidentally related to the ordinary and typical activities of the entity.
Infrequent occurrence means the
event or transaction shall be of a type
not reasonably expected to recur in the
foreseeable future.
(b) Unusual or Infrequent Items. Material events unusual in nature or infrequent in occurrence but not both, thus
not meeting both criteria for classification as extraordinary, shall be includible in the accounts provided as
separate components of income/expense
from continuing operations. Such
items are not to be reported net of income taxes.
(c) Discontinued Operations. The results of continuing operations shall be
reported separately from discontinued
operations and any gain or loss resulting from disposal of a segment of a
business (see definition 32(a)) shall be
reported in conjunction with the related results of discontinued operations
and not as an extraordinary item. The
disposal of a segment of a business
shall be distinguished from other disposals of assets incident to the evolution of the entity’s business, such as
the disposal of part of a line of business, the shifting of production or marketing activities for a particular line
of business from one location to another, the phasing out of a product line
or class of service, and other changes
occasioned by technological improvements. If a loss is expected from the
proposed sale or abandonment of a segment, the estimated loss shall be provided for at the measurement date (see
definition 32(b)). If a gain is expected,
it shall be recognized when realized,
which ordinarily is the disposal date
(see definition 32(c)).
(d) Prior Period Adjustments. The correction of an error in the financial
statements of a prior period and adjustments that result from realization
of
income
tax
benefits
of
preacquisition loss carryforwards of
purchased subsidiaries shall be accounted for as prior period adjustments
and excluded from the determination

Pt. 352
of net income from the current year.
All other revenues, expenses, gains,
and losses recognized during a period
shall be included in the net income of
that period.
(e) Accounting Changes. A change in
accounting principle or accounting entity should be referred to this Commission for approval. The cumulative effect of a change in accounting principle
should ordinarily be reflected in the
account provided for in determining
net income; in certain cases accounting
changes may be reflected as prior period adjustments. Changes in accounting estimates should ordinarily be reflected prospectively.
(f) Materiality. As a general standard
an item shall be considered material
when it exceeds 10 percent of annual income (loss) before extraordinary items.
An item may also be considered in relation to the trend of annual earnings before extraordinary items or other appropriate criteria. Items shall be considered individually and not in the aggregate in determining materiality.
However, the effects of a series of related transactions arising from a single
specific and identifiable event or plan
of action shall be aggregated to determine materiality.
(g) Commission Approval and accountant’s letter. Items shall be included in
the accounts provided for extraordinary items, unusual or infrequent
items, discontinued operations, prior
period adjustments and cumulative effect of changes in accounting principles only upon approval of the Commission. If the carrier retains the service of an independent accountant, a request for using these accounts shall be
accompanied by a letter from the independent accountant approving or otherwise commenting on the request.
NOTE: The carrier may refer to generally
accepted accounting principles for further
guidance in applying instruction 1–6.
[40 FR 53248, Nov. 17, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981; Order 620,
65 FR 81342, Dec. 26, 2000]

1–7 Items in texts of accounts. Items
appearing in instructions and in the
texts of various accounts are merely
representative and are not intended to
cover all of the items includible therein.

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18 CFR Ch. I (4–1–11 Edition)

1–8 Depreciation accounting—Carrier
property.
(a) Method. Monthly depreciation
charges shall be made by the straightline method to operating expenses in
conformity with the group plan of accounting applicable to all carrier property except property included in accounts 101, 151, 171, Land, and 187, Construction Work in Progress.
(b) Rates. (1) Separate composite annual percentage rates will be prescribed for each depreciable account
except that the Commission may authorize the use of component rates
upon specific request from a carrier.
Carriers becoming subject to this system of accounts and carriers acquiring
property for which no rates have been
previously prescribed shall file, within
six months, composite annual percentage rates applicable to the book cost of
each class of depreciable carrier property as will distribute the service
value, by the straight-line method, in
equal annual charges to operating expenses during the service life of the
property. These rates shall be used by
the carrier until the rates prescribed
by the Commission become effective.
Such rates shall, for each primary account comprised of more than one class
of property, produce a depreciation
charge equal to the sum of the
amounts that would otherwise be
chargeable for each of the various
classes of property included in the account. Carriers shall base these percentage rates on estimated service values and service lives developed from
engineering and other studies. The
rates filed shall be accompanied by a
statement showing the bases and the
methods employed in the rate determination.
(2) Carriers shall be prepared at any
time upon the direction of the Commission to compute and submit revised
percentage rate studies. When a carrier
believes that any rate prescribed by
the Commission is no longer applicable, it shall submit the rate which it
believes should be established supported by full particulars for consideration by the Commission.
(3) A carrier shall keep records of
property and property retirements that
will reflect the service life of property
which has been retired, or will permit

the determination of service life indications by mortality, turnover, or
other appropriate methods; and also
such records as will reflect the percentage of net salvage value for property
retired from each class of depreciable
carrier property.
(c) Charges. In computing monthly
charges, the annual percentage rates
shall be applied to the depreciation
base as of the first of each month and
the result divided by twelve.
(d) Retirements. Except as provided in
paragraph (e) of this section, upon the
retirement of depreciable property the
service value shall be charged in its entirety to account 31, Accrued Depreciation—Carrier Property. Any amounts
of insurance recovered from casualty
losses involving depreciable property
retired shall be credited thereto.
(e) Special accounting authority. (1)
When circumstances indicate that
newly acquired property should be subject to amortization, or that the prescribed depreciation rates based on the
service lives of certain property are no
longer applicable, because the source of
traffic will be exhausted before the end
of the physical service life, the carrier
shall submit to the Commission for approval amortization or depreciation
rates based on the estimated remaining
service life of the property accompanied by full information justifying
the request.
(2) A carrier may request, or the
Commission may direct, that special
accounting be applied in situations
causing undue inflation or deflation of
depreciation reserves, such as premature or unusual retirements or sales
of depreciable property, or related insurance recoveries. A carrier’s request
for special accounting shall contain
full particulars concerning the situation, including the basis for its proposal. Alternative accounting techniques shall be applied to the extent
approved or directed by the Commission.
1–9 Depreciation accounting—Noncarrier property. Monthly depreciation
charges for all depreciable property recorded in account 34, Noncarrier Property, shall be made to account 620, Income from Noncarrier Property, with

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Federal Energy Regulatory Commission
concurrent credits to account 35, Accrued Depreciation—Noncarrier Property. The depreciation charges shall be
such as to distribute the service values
equitably over the service life of the
property.
1–10
Amortization
of
intangibles.
Monthly charges shall be made to account 540, Depreciation and Amortization, to amortize the cost of fixed life
intangibles such as permits, patents
and franchises which are directly related to pipeline operations. Monthly
charges shall be made to account 660,
Miscellaneous Income Charges, to amortize the cost of intangibles such as
goodwill which are not directly associated with pipeline operations. The amortization charges shall be such as to
distribute the cost by the straight-line
method in equal annual charges over
the life or expected period of benefit.
1–11 Interpretation of rules. To maintain uniformity of accounting, carriers
shall submit questions of doubtful interpretation to the Commission for
consideration and decision.
1–12 Accounting for income taxes. (a)
The interperiod tax allocation method
of accounting shall be applied to all
material temporary differences (see
definition 30(e)) between the tax basis
of an asset or liability and its reported
amount in the financial statements
that will result in taxable or deductible
amounts in future years. Carriers may
elect, as provided by the Revenue Act
of 1971, to account for the investment
tax credit by either the flow through
method or the deferred method of accounting. See paragraphs (d) and (e)
below. All income taxes (Federal,
State, and other) currently accruable
for income tax return purposes shall be
charged to account 670, Income taxes
on income from continuing operations,
and account 695, Income taxes on extraordinary items, as applicable.
(b) Under the interperiod tax allocation method of accounting a deferred
tax liability or asset is to be recognized
for all temporary differences (see definition 30(e)) that result in taxable
amounts in future years when the related asset or liability is recovered or
settled. Deferred taxes are classified as
current or noncurrent based on the
classification of the related asset or liability. A carrier shall apply the appli-

Pt. 352
cable enacted tax rate in determining
the amount of deferred taxes. The carrier shall adjust its deferred tax liabilities and assets for the effect of the
change in tax law or rates in the period
that the change is enacted. The adjustment shall be recorded in the proper
deferred tax balance sheet accounts
based on the nature of the temporary
difference and the related classification requirements of the account.
(c) An entity shall record the income
tax effects of a net operating loss
carryforward
or
a
tax
credit
carryforward as a deferred tax asset in
the year the loss occurs. In the event
that it is more likely than not (a likelihood of more than 50 percent) that
some portion of its deferred tax assets
will not be realized, a carrier shall reduce the asset by a valuation allowance. The valuation allowance should
be recorded in a separate subaccount of
the deferred tax asset account. The
carrier shall disclose full particulars as
to the nature and amount of each type
of operating loss and tax credit
carryforward in the notes to its financial statements.
(d) Carriers electing to account for
the investment tax credit by the flow
through method shall credit account
670, Income taxes on income from continuing operations, or account 695, Income taxes on extraordinary items, as
applicable, and charge to account 56,
Taxes payable, with the amount of investment tax credit utilized in the current accounting period. When the flow
through method is followed for the investment tax credit, account 671, Provision for deferred taxes, shall reflect
the difference between the tax payable
(after recognition of allowable investment tax credit) based on taxable income and tax expense (with full recognition of investment tax credit that
would be allowable based on accounting income) based on accounting income.
(e) Carriers electing to account for
the investment tax credit by the deferred method shall concurrently with
making the entries prescribed in (d)
above charge account 671, ‘‘Provision
for deferred taxes’’ or account 696,
‘‘Provision for deferred taxes—extraordinary items,’’ as applicable, and shall

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Pt. 352

18 CFR Ch. I (4–1–11 Edition)

credit account 64, Accumulated Deferred Income Tax Liabilities with the
investment tax credit utilized as a reduction of the current year’s tax liability but deferred for accounting purposes. The investment tax credit so deferred shall be amortized by credits to
account 671, ‘‘Provision for deferred
taxes’’.
NOTE A: Any change in practice of accounting for the investment tax credit shall be reported promptly to the Commission. Carriers
desiring to clear deferred investment tax
credits because of a change from the deferral
method to the flow through method shall
submit the proposed journal entry to the
Commission for consideration and advice.
NOTE B: The carrier shall follow generally
accepted accounting principles where an interpretation of the accounting rules for income taxes is needed or obtain an interpretation from its public accountant or the Commission.
(Interstate Commerce Act, 49 U.S.C. 20 (1976),
Department of Energy Organization Act, 42
U.S.C. 7155, 7172(b), 7295(a) (Supp. I 1977); E.
O. 12009, 42 FR 46267 (1977); Federal Energy
Regulatory Commission, Order No. 1, 42 FR
55450 (1977))

WReier-Aviles on DSKGBLS3C1PROD with CFR

[39 FR 33344, Sept. 17, 1974, as amended at 40
FR 53247, Nov. 17, 1975; 44 FR 72161, Dec. 13,
1979. Redesignated by Order 119, 46 FR 9044,
Jan. 28, 1981, as amended by Order 620, 65 FR
81342, Dec. 26, 2000]

1–13 Transactions with affiliated companies. (a) The records and supporting
data of all transactions with affiliated
companies shall be maintained in a
separate file. The types of transactions
referred to in this paragraph are for
management services or any other type
of services rendered, sale or use of facilities or any other type of assets or
property. The file shall be maintained
so as to enable the carrier, to furnish
accurate information with supporting
documentation about particular transactions within 15 days of the request.
We do not intend the file to include
data relating to ordinary carrier operations (e.g. lawful tariff charges).
(b) Each bill rendered by an affiliated
company shall state specifically the
basis used for determining charges, unless the file contains other information
to support the specific basis for
charges.
(c) Punched cards, magnetic tapes,
discs, or other machine-sensible device
used for recording, consolidating, and

summarizing accounting transactions
and records with a carrier’s electronic
or automatic data processing system
may constitute a file within the meaning of this instruction.
(d) The carrier shall record, as the
cost of assets or services received from
an affiliated supplier, the invoice price
(plus any incidental costs related to
those transactions) in those cases
where the invoice price can be determined from a prevailing price list of
the affiliated supplier available to the
general public in the normal course of
business. If no such price list exists,
the charges shall be recorded at the
lower of their cost to the originating
affiliated supplier (less all applicable
valuation reserves in case of asset
sales), or their estimated fair market
value determined on the basis of a representative study of similar competitive and arm’s-length or bargained
transactions.
Any difference between actual transaction price and the above, as well as
charges that are not transportation related, shall be considered of a financing
nature and shall be recorded, accordingly, as nonoperating charges or credits. (See Instruction 1–14).
(e) Nothing contained herein shall be
construed as restraining the carrier
from subdividing accounts (see Instruction 1–2(a)) for the purpose of recording
separately transactions with affiliated
companies.
[40 FR 44562, Sept. 29, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

1–14 Charges to be just and reasonable.
All charges to the accounts prescribed
in this system of accounts for carrier
property, operating revenues, operating and maintenance expenses, and
other carrier expenses, shall be just,
reasonable and not exceed amounts
necessary to the honest and efficient
operations and management of carrier
business. Payments shall not exceed
the fair market value of goods and
services acquired in an arm’s-length
transaction. Any payments in excess of
such just and reasonable charges shall
be included in account 660, Miscellaneous Income Charges.
[40 FR 44562, Sept. 29, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

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Federal Energy Regulatory Commission
1–15 Accounting for marketable securities owned.
(a) Accounts 11 ‘‘Temporary investments,’’ 20 ‘‘Investments in affiliated
companies,’’ and 21 ‘‘Other investments’’ shall be maintained in such a
manner as to reflect the marketable
equity portion (see definition 35) and
other securities or investments.
(b) For the purpose of determining
net ledger value, the marketable equity securities in account 11 shall be
considered the current portfolio and
the marketable equity securities in accounts 20 and 21 (combined) shall be
considered the noncurrent portfolio.
(c) Carriers will categorize their security investments as held-to-maturity, trading, or available-for-sale. Unrealized holding gains and losses on
trading type investment securities will
be recorded in accounts 640, miscellaneous income, and 660, miscellaneous
income charges, as appropriate. Unrealized holding gains and losses on
available-for-sale type investment securities shall be recorded in account 77,
accumulated other comprehensive income.
[42 FR 33297, June 30, 1977. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981, and
amended by Order 627, 67 FR 67706, Nov. 6,
2002]

WReier-Aviles on DSKGBLS3C1PROD with CFR

1–16 Accounting for inaccurate reporting of income taxes on income from continuing operations which occurred prior
to reporting year 1979. To the extent
that any oil pipeline company, required
to file annual reports with the Commission, did not correctly report State
or other income taxes on continuing
operations for the 1976, 1977, and 1978
reporting years, such company is ordered to disclose the amount of the accounting change in the space for notes
and remarks provided in its 1979 Annual Report Form P, Schedule 300–A, of
the Commission.
(Interstate Commerce Act, 49 U.S.C. 20 (1976),
Department of Energy Organization Act, 42
U.S.C. 7155, 7172(b), 7295(a) (Supp. I 1977); E.
O. 12009, 42 FR 46267 (1977); Federal Energy
Regulatory Commission, Order No. 1, 42 FR
55450 (1977))
[44 FR 72161, Dec. 13, 1979. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

1–17 Accounting for other comprehensive income.

Pt. 352
(a) Carriers shall record items of
other comprehensive income in account 77, accumulated other comprehensive income. Amounts included
in this account shall be maintained by
each category of other comprehensive
income. Examples of categories of
other comprehensive income include,
foreign currency items, minimum pension liability adjustments, unrealized
gains and losses on available-for-sale
type securities and cash flow hedge
amounts. Supporting records shall be
maintained for account 77 so that the
company can readily identify the cumulative amount of other comprehensive income for each item included in
this account.
(b) When an item of other comprehensive income enters into the determination of net income in the current or subsequent periods, a reclassification adjustment shall be recorded
in account 77 to avoid double counting
of that amount.
[Order 627, 67 FR 67706, Nov. 6, 2002]

1–18 Accounting for derivative instruments and hedging activities.
(a) A carrier shall recognize derivative instruments as either assets or liabilities in the financial statements
and measure those instruments at fair
value, except those falling within recognized exceptions, the most common
of which being the normal purchases
and sales scope exception. Normal purchases or sales are contracts that provide for the purchase or sale of goods
that will be delivered in quantities expected to be used or sold by the utility
over a reasonable period in the normal
course of business. A derivative instrument is a financial instrument or other
contract with all three of the following
characteristics:
(1) It has one or more underlyings
and a notional amount or payment provision. Those terms determine the
amount of the settlement or settlements, and, in some cases, whether or
not a settlement is required.
(2) It requires no initial net investment or an initial net investment that
is smaller than would be required for
other types of contracts that would be
expected to have similar response to
changes in market factors.
(3) Its terms require or permit net
settlement, can readily be settled net

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18 CFR Ch. I (4–1–11 Edition)

by a means outside the contract, or
provides for delivery of an asset that
puts the recipient in a position not
substantially different from net settlement.
(b) The accounting for the changes in
the fair value of derivative instruments
depends upon its intended use and designation. Changes in the fair value of
derivative instruments not designated
as fair value or cash flow hedges shall
be recorded in account 46, derivative
instrument assets, or account 65, derivative instrument liabilities, as appropriate, with the gains recorded in account 640, miscellaneous income, and
losses recorded in account 660, miscellaneous income charges.
(c) A derivative instrument may be
specifically designated as a fair value
or cash flow hedge. A hedge may be
used to manage risk to price, interest
rates, or foreign currency transactions.
An entity shall maintain documentation of the hedge relationship at the inception of the hedge that details the
risk management objective and strategy for undertaking the hedge, the nature of the risk being hedged, and how
hedge effectiveness will be determined.
(d) If the carrier designates the derivative instrument as a fair value hedge
against exposure to changes in the fair
value of a recognized asset, liability, or
a firm commitment, it shall record the
change in fair value of the derivative
instrument designated as a fair value
hedge to account 47, derivative instrument assets-hedges, or account 66, derivative instrument liabilities-hedges,
as appropriate, with a corresponding
adjustment to the subaccount of the
item being hedged. The ineffective portion of the hedge transaction shall be
reflected in the same income or expense account that will be used when
the hedged item enters into the determination of net income. In the case of
a fair value hedge of a firm commitment, a new asset or liability is created. As a result of the hedge relationship, the new asset or liability will become part of the carrying amount of
the item being hedged.
(e) If the carrier designates the derivative instrument as a cash flow hedge
against exposure to variable cash flows
of a probable forecasted transaction, it
shall record changes in the fair value of

the derivative instrument in account
47,
derivative
instrument
assetshedges, or account 66, derivative instrument liabilities-hedges, as appropriate, with a corresponding amount in
account 77, accumulated other comprehensive income, for the effective
portion of the hedge. The ineffective
portion of the hedge transaction shall
be reflected in the same income or expense account that will be used when
the hedged item enters into the determination of net income. Amounts recorded in other comprehensive income
shall be reclassified into earnings in
the same period or periods that the
hedged forecasted item enters into the
determination of net income.
[Order 627, 67 FR 67706, Nov. 6, 2002]

1–19 Accounting for asset retirement
obligations.
(a) An asset retirement obligation represents a liability for the legal obligation associated with the retirement of
a tangible long-lived asset that a utility is required to settle as a result of
an existing or enacted law, statute, ordinance, or written or oral contract or
by legal construction of a contract
under the doctrine of promissory estoppel. An asset retirement cost represents
the amount capitalized when the liability is recognized for the long-lived
asset that gives rise to the legal obligation. The amount recognized for the liability and an associated asset retirement cost shall be stated at the fair
value of the asset retirement obligation in the period in which the obligation is incurred.
(b) The carrier shall initially record a
liability for an asset retirement obligation in account 67, Asset retirement
obligations, and charge the associated
asset retirement costs to account 30,
Carrier property, and account 34, Noncarrier property, as appropriate, related to the property that gives rise to
the legal obligation. The asset retirement cost shall be depreciated over the
useful life of the related asset that
gives rise to the obligations. For periods subsequent to the initial recording
of the asset retirement obligation, a
carrier shall recognize the period to period changes of the asset retirement
obligation that result from the passage

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of time due to the accretion of the liability and any subsequent measurement revisions to the initial liability
for the legal obligation recorded in account 67, Asset retirement obligations,
as follows:
(1) The carrier shall record the accretion of the liability by debiting account 591, Accretion expense, for carrier property, account 620, Income (net)
from noncarrier property, for noncarrier property and crediting account 67,
Asset retirement obligations; and
(2) The carrier shall recognize any
subsequent measurement changes of
the liability initially recorded in account 67, Asset retirement obligations,
for each specific asset retirement obligation as an adjustment of that liability in account 67 with the corresponding adjustment to carrier property and noncarrier property accounts,
as appropriate. The utility shall on a
timely basis monitor any measurement
changes of the asset retirement obligations.
(c) Gains or losses resulting from the
final settlement of asset retirement obligations for carrier plant resulting
from the difference between the
amount of the liability for the asset retirement obligation in account 67,
Asset retirement obligations, and the
actual amount to settle the obligation,
shall be recorded in account 592, Gains
or losses on asset retirement obligations.
(d) Gains or losses resulting from the
final settlement of asset retirement obligations for noncarrier plant resulting
from the difference between the
amount of the liability for the asset retirement obligation in account 67,
Asset retirement obligations, and the
actual amount to settle the obligation,
shall be recorded in account 620, Income (net) from noncarrier property.
(e) Separate subsidiary records shall
be maintained for each asset retirement obligation showing the initial liability and associated asset retirement
cost, any incremental amounts of the
liability incurred in subsequent reporting periods for additional layers of the
original liability and related asset retirement cost, the accretion of the liability, the subsequent measurement
changes to the asset retirement obligation, the depreciation and amortization

Pt. 352
of the asset retirement costs and related accumulated depreciation, and
the settlement date and actual amount
paid to settle the obligation. For purposes of analyses a carrier shall maintain supporting documentation so as to
be able to furnish accurately and expeditiously with respect to each asset retirement obligation the full details of
the identity and nature of the legal obligation, the year incurred, the identity of the plant giving rise to the obligation, the full particulars relating to
each component and supporting computations related to the measurement
of the asset retirement obligation.
[Order 631, 68 FR 19625, Apr. 21, 2003]

INSTRUCTIONS FOR BALANCE SHEET
ACCOUNTS
2–1 Current assets. In the group of accounts designated as current assets
shall be included cash and other assets
or resources commonly identified as
those which are reasonably expected to
be realized in cash or sold or consumed
within a one-year period. There shall
not be included any amount the collection of which is not reasonably assured
by the known financial condition of the
debtor or otherwise. Items of current
character but of doubtful value shall be
written down or written off to account
510, Supplies and Expenses, or to account
660,
Miscellaneous
Income
Charges, as appropriate.
2–2 Investments and special funds. (a)
This group of accounts shall include
the cost of long-term investments in
securities other than those of the accounting carrier, investment advances,
sinking and other funds, cash value of
life insurance policies, and other items
of similar nature.
(b) Investment in securities shall be
recorded at cost at time of acquisition
excluding amounts paid for accrued interest and dividends. When securities
with a fixed maturity date are purchased at a discount or premium, such
discount or premium shall be amortized over the remaining life of the securities by periodical debits or credits
to the account in which the cost of the
securities is recorded with corresponding credits or debits to interest
income. If the amount of the discount
or premium is minor, the investment

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may be maintained at actual cost without adjustment, and the amount of discount or premium recorded in the interest income account at the time the
securities mature.
(c)(1) For financial statement purposes
the carrier shall follow the principles
of equity accounting for (1) all investments in corporate joint ventures (see
definition 31(c)), and (2) all investments in voting stock of affiliated
companies giving the carrier the ability to significantly influence the operating and financial policies of an
investee (see definition 31(b)). For purposes of this instruction an investment
of 20 percent or more of the outstanding voting stock of an investee
will indicate the ability to exercise significant influence over an investee in
the absence of evidence to the contrary.
(2) Since the equity method is not to
be effected by entries in the books of
accounts but is to apply only in financial reports to the Commission, the
carrier shall establish worksheet or
memorandum accounts. Three basic
worksheet or memorandum accounts
are needed:
(a) An investment account to include
(1) equity in the undistributed earnings
or losses of the investee since the date
of acquisition (see definition 31(g)); (2)
accumulated amortization of the difference between cost and net assets at
date of acquisition (see (c)(3) below);
and other adjustments for disposition
or writedown of investments.
(b) An income account to include (1)
the investor’s share of the investee’s
undistributed profits or losses for each
reporting period subsequent to acquisition of the investment except that in
the year of acquisition such amount
shall be determined from the date of
acquisition; (2) amortization for the reporting period of the difference between cost and net assets at date of acquisition. This account shall be closed
at year-end to the retained income
memorandum account discussed in
paragraph (c) below.
(c) A retained income account to include (1) equity in the undistributed
earnings or losses of the investee since
the date of acquisition; (2) accumulated amortization of the difference be-

tween cost and net assets acquired at
date of acquisition (see (c)(3) below).
(d) Other memorandum accounts will
be needed for such adjustments as
gains and losses on disposition of investments, recognition of impairments
in value, the investor’s share of extraordinary and prior period items reported in the investee’s financial statements (see instruction 1–6), and provision for deferred taxes where it is reasonable to assume that undistributed
earnings of an investee will be transferred to the investor in a taxable distribution. These memorandum accounts shall be closed at year-end to
the retained income memorandum account discussed in paragraph (c) above.
(3) The carrier shall retain the following information for each investee in
support of the worksheet or memorandum accounts:
(a) Original cost of investment.
(b) Equity in net assets of investee at
date of acquisition.
(c) Allocation of difference between
cost and equity in net assets, namely,
to specific assets of investee or to
goodwill.
(d) Accumulated amortization of difference between cost and equity in net
assets.
(e) Unamortized balance of difference
between cost and equity in net assets.
(f) Equity in undistributed earnings/
losses for each year since date of acquisition.
(g) Dividends received since date of
acquisition if determinable.
(h) Proceeds from sale of investments.
(4) Any difference between the investor’s cost and its share of the net assets of the investee at date of acquisition shall be allocated to specific assets of the investee to the extent the
difference is attributable to them.
When the difference is allocated to depreciable or amortizable assets, depreciation and amortization (through the
investment and income memorandum
accounts) should absorb the difference
over the remaining life of the related
assets. If the difference is not related
to specific accounts, it should be considered goodwill and amortized over a
reasonable period not to exceed 40
years. For investments made prior to

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November 1, 1970, amortization of goodwill is not required in the absence of
evidence that the goodwill has a limited term of existence.
(5) The financial statements of the
investee that are used for equity accounting should be timely. If the accounting year of the investee differs
from that of the investor then the most
recent available financial statements
may be used. The lag in reporting
should be consistent from period to period.
(6) Material profits or losses on
transactions between the investor and
investee shall be eliminated until realized by either company as if the two
were consolidated.
(7) A transaction of the investee of a
capital nature that affects the investor’s share of the investee’s stockholder’s equity should be reported in
the financial statements as if the two
were consolidated.
(8) The investor shall deduct any
dividends applicable to outstanding cumulative preferred stock whether or
not declared, and any other dividends
declared when computing its share of
undistributed earnings or losses.
(9) The investor shall suspend application of the equity method when the
investment (including the investment
memorandum account) together with
any net advances made to the investee
is reduced to zero. Additional losses
shall not be provided for unless the investor has guaranteed obligations of
the investee or is otherwise committed
to provide further financial support for
the investee. If the investee subsequently reports net income the investor shall resume applying the equity
method at such time as its share of
that net income equals the share of net
losses not recognized during the period
of suspension.
(10) When the investor’s voting stock
interest falls below the level of ownership described in paragraph (c)(1) of
this instruction, the investment no
longer qualifies for the equity method.
Should dividends received on the investment in subsequent periods exceed
the investor’s share of earnings for
such periods, the investment memorandum and income memorandum accounts shall be reduced by the excess
amount.

Pt. 352
(11) When the level of ownership of an
investment increases to that described
in paragraph (c)(1) of this instruction,
the equity method shall be applied. The
memorandum accounts for the investment, income (for current year’s equity
in undistributed earnings less amortization), and retained income (for prior
years’ equity in undistributed earnings
less amortization) shall be adjusted
retroactively on a step-by-step basis
determining the equity in net assets at
date of acquisition, amortization adjustment, and equity in undistributed
earnings or losses at each level of ownership. Where small purchases are
made over a period of time and then a
purchase is made which qualifies the
investment for the equity method, the
date of latest purchase may be used as
date of acquisition. In those situations
where the information needed to apply
the equity method is not determinable,
the date of acquisition may be considered as January 1, 1974.
(12) Information having significance
with respect to the investor’s ownership in investees shall be disclosed in
notes to financial statements of annual
reports filed with the Commission in
accordance with generally accepted accounting principles.
NOTE A: The carrier shall follow generally
accepted accounting principles where an interpretation of the rules for equity accounting is needed or obtain an interpretation
from its public accountant or the Commission.
[32 FR 20241, Dec. 20, 1967, as amended at 39
FR 34043, Sept. 23, 1974. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

2–3 Tangible property. The cost of
property owned that is devoted to
transportation service shall be recorded in account 30, Carrier Property,
and in account 33, Operating Oil Supply. This includes carrier’s investment
in jointly-owned transportation property in which it has an undivided ownership interest. The cost of other property not directly associated with pipeline operations shall be included in account 34, Noncarrier Property. Property used in both carrier and noncarrier services shall be classified in account 30 or account 34 according to its
dominant use.
2–4 Other assets and deferred charges.
Account 40, Organization Costs and

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Other Intangibles, is prescribed for organization costs and other intangible
assets, such as patents and franchises.
These intangible assets shall be recorded at cost. Accounts are also prescribed for assets not otherwise provided for and for charges applicable to
future periods.
2–5 Current liabilities. In this group of
accounts shall be included obligations
which are payable on demand or mature or become due within one year
from the date of the balance sheet.
2–6 Noncurrent liabilities. Includible
under this category of account are
those obligations which are not due to
be liquidated within one year from the
date of the balance sheet. Estimates of
future fire losses or other contingencies shall not be accounted for as
current expenses or recorded as liabilities. Such contingencies may be provided for by appropriations of retained
income, the losses to be recognized in
income when sustained.
2–7 Contingent assets and liabilities.
(a) A contingency is an existing condition, situation, or set of circumstances involving uncertainty as to
possible gain or loss to a carrier that
will ultimately be resolved when one or
more future events occur or fail to
occur. Resolution of the uncertainty
may confirm the acquisition of an
asset or the reduction of a liability or
the loss or impairment of an asset or
the incurrence of a liability.
(b) An estimated loss from a contingent liability shall be charged to income if it is probable that an asset had
been impaired or a liability had been
incurred and the amount of the loss
can be reasonably estimated. The carrier shall disclose in a footnote in its
annual report any accrued contingent
liabilities, along with any contingent
liabilities not meeting both conditions
for accrual if there is a reasonable possibility that a liability may have been
incurred.
(c) Contingent assets should not be
reflected in the accounts. The carrier
shall disclose in a footnote in its annual report any contingencies that
might result in an asset.
[32 FR 20241, Dec. 20, 1967. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981, as amended by Order 620, 65 FR 81342, Dec. 26, 2000]

INSTRUCTIONS FOR CARRIER PROPERTY
ACCOUNTS
3–1 Property acquired. (a) In general
the carrier property accounts shall be
charged with the cost of property purchased or constructed and with the
cost of additions and improvements.
However, the acquisition of properties
comprising a distinct operating system, or an integral portion thereof,
when the purchase price exceeds
$250,000, shall be accounted for in accordance with the provisions set forth
in instruction 3–11.
(b) The cost of purchased property is
the net price paid on a cash basis, or if
other than money is given, the current
value of that consideration. Cost includes the purchase price; sales, use,
and excise taxes, and ad valorem taxes
during periods of construction; transportation charges; insurance in transit;
installation charges; and expenditures
for testing and final preparation for
use.
(c) Property acquired from an affiliated company through purchase or
transfer shall be recorded together
with the related accrued depreciation
and liabilities assumed, if any, in the
appropriate property accounts at the
same amount that it was recorded on
the books of the affiliate. When the
purchase price exceeds the net book
value of the property acquired, the difference shall be charged to retained income. When the purchase price is less
than the net book value, the difference
shall be credited to account 73, Additional Paid-in Capital. This does not
apply to small miscellaneous purchases
or transfers.
(d) The purchase of a proportionate
share of a pipeline system or facility
owned in undivided interests shall be
recorded at the amount that the percentage of interest acquired bears to
the whole. Any excess of deficiency of
purchase price over the amount so recorded shall be debited to account 44,
Other Deferred Charges, or credited to
account 63, Other Noncurrent Liabilities, as appropriate, and amortized in
equal periodic amounts over the remaining service life of the system or
facility through income.
3–2 [Reserved]

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3–3 Cost of property constructed. The
cost of constructing property chargeable to the carrier property accounts
shall include direct and other costs as
described hereunder:
(1) Cost of labor includes the amount
paid for labor performed by the carrier’s own employees and officers. This
includes payroll taxes, vacation pay,
pensions, holiday pay and traveling
and other incidental expenses of employees. No charge shall be made to
these accounts for pay and expenses of
officers and employees who merely
render services incidentally in connection with extensions, additions or replacements.
(2) Cost of material and supplies includes the purchase price (less purchase and trade discounts) of material
and supplies, including small tools, at
the point of free delivery; costs of inspection and loading borne by the carrier; transportation charges; sales, use
and excise taxes; and when applicable a
proportionate share of stores expenses.
In calculating the cost of material and
supplies used, proper allowance shall be
made for the value of unused portions
and other salvage, for the value of the
material recovered from temporary
scaffolding, cofferdams and other temporary structures used in construction:
and for the value of small tools recovered and used for other purposes.
(3)(i) Cost of special machine service
includes the cost of labor expended and
of materials and supplies consumed in
maintaining and operating vehicles,
equipment, and other machines used in
construction work; and rents paid for
the use of such machines.
(ii) When machines are purchased
primarily for a construction project,
their cost shall be charged to account
187, Construction Work in Progress.
Upon completion of the construction
project, account 187 shall be credited
with amounts received for machines
sold or the book cost (less a fair allowance for depreciation during the construction period) of machines retained
for use in carrier service. The net book
cost shall be included in the appropriate carrier property accounts.
(iii) The cost of repairs to vehicles
and other work equipment and of machine tools and machinery which are
used both in construction and mainte-

Pt. 352
nance work shall be apportioned equitably to the work in connection with
which the equipment is used.
(4) Cost of transportation includes
the amounts paid to other companies
or individuals for the transportation of
employees, material and supplies, special machine outfits, appliances, and
tools in connection with construction
and also the cost of hauling performed
by the carrier’s own forces and facilities. The cost of the transportation of
construction material to the point
where material is received by the carrier shall be included, so far as practicable, as a part of the cost of such
material.
(5) Cost of contract work includes
amounts paid for construction work
performed under contract by other
companies, firms, or individuals, and
cost incident to the award of the contract.
(6) Cost of protection includes expenditures for protection in connection
with construction. This includes the
cost of protection against fires, cost of
detecting and prosecuting incendiaries,
amounts paid to municipal corporations and others for fire protection,
cost of protecting property of others
from damages, and analogous items.
(7) Cost of injuries and damages includes expenditures for injuries to persons or damage to property when incident to construction projects, and shall
be included in the cost of the related
construction work. It also includes
that portion of premiums paid for insuring property prior to the completion
or coming into service of the property
insured. Insurance recovered for compensation paid for injuries to persons
incident to construction shall be credited to the accounts to which such
compensation is charged. Any insurance recovered for damages to property
incident to construction shall be credited to the accounts chargeable with
the expenditures necessary for restoring the damaged property. The cost of
injuries and damages in connection
with the removal of old structures
which are encumbrances on newly acquired lands shall be included in the
cost of land, or rights of way.
(8) Cost of privileges and permits includes compensation for temporary
privileges, such as the use of private or

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18 CFR Ch. I (4–1–11 Edition)

public property or of streets, in connection with construction work.
(9) Taxes include taxes on property
during construction and before the facilities are completed and ready for
service. This includes taxes on land
held under a definite plan for its use in
pipeline service for the period prior to
the completion of pipeline facilities
thereon and other taxes separately assessed on property during construction,
or assessed under conditions which permit separate identification or allocation of the amount chargeable to construction.
(10) Rent includes payments for use
of facilities, such as motor vehicles,
special tools or machines, and quarters
used for construction work.
(11)(i) Interest during construction
includes interest expense on bonds,
notes and other interest bearing debt
incurred in the construction of carrier
property (less interest, if any, earned
on funds temporarily invested) after
such funds become available for use
and before the receipt or the completion or coming into service of the property. The interest shall be included in
the accounts charged with the cost of
the property to which related.
(ii) There shall be deducted from such
interest charges a proportion of premium on securities sold. There shall be
added a proportion of discount and expense on funded debt issued for the acquisition or construction of carrier
property. The amount of premium and
discount and expense thus related shall
be determined by the ratio which the
period between the date the proceeds
from the securities issued become
available and the receipt, completion,
or coming into service of the property
bears to the entire life of the securities
issued.
(iii) Interest during construction
shall not be recognized on the asset retirement costs incurred during the construction of carrier and noncarrier
property.
(12) Cost of disposing of excavated
material shall be included in the cost
of construction except that when such
material is used for filling, the cost of
loading, hauling, and dumping shall be
equitably apportioned between the
work for which removal is made and

the work for which the material is
used.
(13) Asset retirement costs that are
recognized as a result of asset retirement obligations incurred during construction shall be included in the cost
of construction costs.
3–4 Additions. Each carrier shall
maintain a written property units listing for use in accounting for additions
and retirements of carrier plant and
apply the listing consistently. When
property units are added to Carrier
plant, the cost thereof shall be added
to the appropriate carrier plant account as set forth in the policy.
3–5 Improvements. Costs of improvements, shall be accounted for as follows:
(a) The cost of items replaced shall
be retired and the cost of the improvement shall be charged to the appropriate property account.
(b) If the improvement does not involve a replacement, the cost of the
improvement shall be charged to the
appropriate property account.
[32 FR 20241, Dec. 20, 1967. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981, as amended by Order 620, 65 FR 81343, Dec. 26, 2000;
Order 631, 68 FR 19625, Apr. 21, 2003]

3–6 Replacements. Replacements are
substitutions of a part or of a complete
unit of property with a new part or
unit. Costs of replacements shall be accounted for as follows:
(a) In replacing a complete unit of
property, the old unit shall be retired
and the cost of the replacement recorded in the appropriate primary
property account.
(b) In replacing a minor item without
improvement, the cost of such replacement shall be charged to the maintenance expense account.
3–7 Retirements. When property units
are retired from carrier plant, with or
without replacement, the cost thereof
and the cost of minor items of property
retired and not replaced shall be credited to the carrier plant account in
which it is included. The retirement of
carrier property shall be accounted for
as follows:
(a) Land. The book cost of land retired shall be removed from the property accounts. Gain or loss on the sale
of land shall be recorded in account 640,

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Federal Energy Regulatory Commission
Miscellaneous Income, or account 660,
Miscellaneous Income Charges.
(b) Property. (1) The book cost, as set
forth in paragraph c below, of units of
property retired and of minor items of
property retired and not replaced shall
be written out of the property account
as of date of retirement, and the service value shall be charged to account
31,
Accrued
Depreciation—Carrier
Property.
(2) In case of casualty loss, insurance
proceeds recovered shall be credited to
account 31, Accrued Depreciation—Carrier Property, in an amount not to exceed the book cost of the property involved. Any excess amount shall be
credited to account 640, Miscellaneous
Income.
(3) Carrier property no longer used
nor held for carrier operations but used
or intended for use in noncarrier operations shall be transferred, along with
the amount of past accrued depreciation, estimated if necessary, to noncarrier property.
(c) The book cost of carrier property
retired shall be determined from the
carrier’s records and if this cannot be
done it shall be estimated. When it is
impracticable to determine the book
cost of each unit, due to the relatively
large number or small cost thereof, an
appropriate average book cost of the
units, with due allowance for any differences in size and character, shall be
used as the book cost of the units retired. Oil pipelines must furnish the
particulars of such estimates to the
Commission, if requested.

WReier-Aviles on DSKGBLS3C1PROD with CFR

[32 FR 20241, Dec. 20, 1967, as amended at 40
FR 53248, Nov. 17, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981; Order 598,
63 FR 6852, Feb. 11, 1998]

3–8 Salvage. (a) When retired property
is salvaged for material or parts which
are to be reused by the carrier, the salvage shall be priced at current secondhand value, not to exceed original cost,
and charged to account 17, Material
and Supplies, or other appropriate account.
(b) When retired property is held
without being dismantled, the estimated value of the salvage less the estimated cost of salvaging shall be included in account 19, Other Current Assets, if to be recovered within a year,

Pt. 352
otherwise, in account 43, Miscellaneous
Other Assets.
3–9 Relocation of line. (a) If a line is
relocated in the same gathering field
serving the same lease or purpose, all
of the relocating expenses whether or
not a unit of property is involved shall
be charged to maintenance expense,
provided that the same size pipe is used
in such relocation. Resulting increases
or decreases in the length of the line
shall be accounted for as additions or
retirements of property.
(b) In accounting for relocation of
trunk lines involving units of property,
the replaced property shall be retired
and the cost of the new property included in the appropriate primary
property accounts. When public improvement projects are involved, the
cost of the new property shall be (1) the
book cost less depreciation or amortization of the replaced property, less
the net salvage value recovered, plus
(2) costs incurred by the carrier, less
any amounts contributed by governmental agencies or others.
3–10 Property contributed. (a) The
value of contributions or property received from others including governmental agencies shall not be recorded
in the property accounts; however,
memorandum entries should be made
in the records of the carrier describing
the property received, the value thereof, and all other pertinent information
related thereto.
(b) Property contributed by an affiliate shall be recorded in the property
accounts together with the related accrued depreciation at the same
amounts that were recorded on the
books of the affiliate provided, however, that the amount of contribution
made by non-carrier affiliates shall not
exceed the fair value of the property
received.
3–11 Acquisition by merger, consolidation or purchase. Accounting for property acquired by business combination
of two or more corporations, or the acquisition of properties comprising a
distinct operating system, or integral
portion thereof as specified in section
3–1, shall depend on whether there has
been (1) a merger or consolidation in a
‘‘pooling of interests’’ or (2) a ‘‘purchase.’’ A ‘‘pooling of interests’’ may

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exist when holders of all or substantially all of the ownership interests,
usually common stock, in the constituent corporations or entities become the owners of a surviving corporation or a new corporation which
owns the assets and business of the
constituent corporations or entities directly or through one or more subsidiaries. However, when the stockholders
of one of the constituent corporations
obtain 90 percent or more of the voting
interest in the combined enterprise; or
when there is a plan or firm intention
and understanding to retire a substantial part of the capital stock issued to
the owners of one or more of the constituent corporations or substantial
changes in ownership which occurred
shortly before or planned to occur
shortly after the combination, the
combination may be considered a
‘‘purchase.’’
(a) Accounting under a ‘‘pooling in interest.’’ (1) In accounting for a ‘‘pooling
of interests,’’ no new basis of accountability arises. The assets and liabilities
of the constituent companies or entities and the related accrued depreciation and amortization accounts along
with the retained income or deficit accounts shall be carried forward, adjusted, if necessary, to conform with
the accounting rules of the Commission.
(2) When the total par value or stated
value of no-par capital stock of the
succeeding corporation is greater than
that of the constituent corporations,
the excess shall be charged first to the
amount in account 73, Additional Paidin Capital, that is not otherwise restricted, and the Balance to account 75,
Unappropriated Retained Income.
(3) When the par value or stated
value of no-par capital stock of the
succeeding corporation is less than
that of the constituent corporations,
the difference shall be credited to account 73, Additional Paid-in Capital.
(b) Accounting under a ‘‘purchase.’’ In
accounting for a ‘‘purchase,’’ the assets
shall be recorded on the books of the
acquiring carrier at cost as of the date
of acquisition or, if other than money
is given, at the fair value of such consideration. Liabilities assumed shall be
recorded in the appropriate accounts

according to the accounting rules of
the Commission.
(c) Approval of accounting. (1) Tentative journal entries recording the acquisition of pipeline properties shall be
submitted to the Commission for consideration and approval. The entries
shall give a complete description of the
property purchased and the basis upon
which the amounts of the entries have
been determined. Any portion of the
purchase price attributable to intangible property shall be separately recorded as hereinafter provided in account 40, Organization Costs and Other
Intangibles.
(2) When the costs of individual or
groups of transportation property are
not specified in the agreement or in
supporting documents, or when separate costs are not provided for the
physical property and the intangible
property, the total purchase price shall
be equitably apportioned among the
appropriate property or other accounts, based on the percentage relationship between the purchase price
and the original cost of property shown
in the valuation records of the Commission or the fair market value of the
properties. The portion of the total
price assignable to the physical property shall be supported by independent
appraisal or such other information as
the Commission may consider appropriate. In no event shall amounts recorded for physical properties and
other assets acquired exceed the total
purchase price.
(3)(a) Where the purchase price is in
excess of amounts recorded for the net
assets acquired, such excess shall be included in account 40, Organization
Costs and Other Intangibles.
(b) The excess of the purchase price
over amounts includable in the primary carrier property accounts shall
be amortized through account 660,
‘‘Miscellaneous income charges,’’ or
otherwise disposed of, as the Commission may approve or direct.
[32 FR 20241, Dec. 20, 1967, as amended by 35
FR 13992, Sept. 3, 1970; 37 FR 17713, Aug. 31,
1972. Redesignated by Order 119, 46 FR 9044,
Jan. 28, 1981]

3–12 Reorganizations. When a carrier
is involved in receivership or bankruptcy so as to effect a reorganization,
all accounting relating to the plan of

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Federal Energy Regulatory Commission
reorganization shall be submitted to
this Commission for consideration and
approval.
3–13 Disposition of former Account 193,
Acquisition Adjustment. Amounts included in former account 193, Acquisition Adjustment, attributable to mergers, consolidations, reorganizations,
and purchases of property shall be
cleared from that account as the Commission may authorize or direct upon
submission of proposal for distribution
of the amounts therein.
[32 FR 20241, Dec. 20, 1967. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981 and
amended by Order 598, 63 FR 6852, Feb. 11,
1998]

WReier-Aviles on DSKGBLS3C1PROD with CFR

INSTRUCTIONS FOR OPERATING REVENUES
AND OPERATING EXPENSES
4–1 Detail of accounts. The carrier
shall keep the prescribed accounts with
sufficient particularity to permit the
reporting of operating revenues and expenses for crude oil lines and for product lines separately, and to permit the
allocation of operating expenses by
service functions (see 4–3 Operating Expenses).
4–2 Operating revenues. The operating
revenue accounts are designed to show
the amount of money which the carrier
becomes entitled to receive or which
accrues to its benefit for transportation and services incidental thereto.
4–3 Operating expenses. The operating
expense accounts are designed to show
the costs of pipeline operations by
service functions. The expenses of pipeline operations are to be allocated to
the following functions:
(a) Gathering. This includes the gathering and collection of oil, oil products
and other commodities from oil field,
refinery, or other source (other than
carrier’s own terminal and delivery facilities), and transmission to point of
connection to meters, working or storage tanks, or intake side of the manifold at the trunk line receiving site or
station, or at a terminal.
(b) Trunk. This includes the trunk
line transportation of crude oil, oil
products and other commodities from
origin or receiving station to point of
connection with other carriers, consignee facilities at destination, or to
the discharge side of the manifold or

Pt. 352
connection to working or storage tanks
at the destination station.
(c) Delivery. This includes the receiving, storage, and delivering at terminal
and delivery facilities of crude oil, oil
products and other commodities from
or to railroads, motor carriers, water
carriers, and others prior or subsequent
to movement by pipeline.
4–4 Expense classification. The primary
expense accounts are to be reported
under the following classifications:
(a) Operations and maintenance expense. This group of accounts includes
all costs directly associated with the
operation, repairs and maintenance of
property devoted to pipeline operations
including
scheduling,
dispatching,
movement, and delivery of crude oil,
oil products and other commodities.
(b) General expense. This group of accounts includes general and administrative expense and all other expenses
not directly allocable to operations and
maintenance expenses.
4–5 Expense distribution. The several
classes of expenses shall be directly allocated to applicable service functions
to the fullest possible extent. Expenses
common to two or more functions and
system expenses shall be equitably apportioned to the service functions. The
basis for apportionment and the underlying records in support thereof shall
be readily available for inspection by
the Commission’s examiners.
[32 FR 20241, Dec. 20, 1967. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981, as amended by Order 620, 65 FR 81343, Dec. 26, 2000]

BALANCE SHEET ACCOUNTS
10 Cash.
This account shall include money,
checks, sight drafts and sight bills of
exchange, money in banks or in other
depositories subject to withdrawal on
demand, and other similar items. The
amount of checks and sight drafts
transmitted to payees which are unpaid at the close of the accounting period shall be credited to this account.
NOTE: Compensating balances (see Definition 33) under an agreement which legally restricts the use of such funds shall not be included in this account. Such balances shall

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Pt. 352

18 CFR Ch. I (4–1–11 Edition)

be included in account 10–5 ‘‘Special deposits’’ or account 22 ‘‘Sinking and other
funds.’’
(49 U.S.C. 304, 913, 1012)
[32 FR 20241, Dec. 20, 1967, as amended at 41
FR 9158, Mar. 3, 1976. Redesignated by Order
119, 46 FR 9044, Jan. 28, 1981]

10–5 Special deposits.
This account shall include cash deposits, either placed in hands of trustees or under the direct control of the
reporting company, which are restricted for specific purposes. Examples
are those deposits made for the payment of dividends and interest due
within one year, the liquidation of
other current liabilities, to guarantee
fulfillment of current contract obligations, to meet specific operating requirements, or compensating balances
(see Definition 33) under an agreement
which legally restricts the use of such
funds and which constitute support for
short-term borrowing arrangements.
Sub-accounts may be set up, if necessary to account for special deposits
for specific purposes.
NOTE: Deposits available for general company purposes shall be included in account 10
‘‘Cash.’’
(49 U.S.C. 304, 913, 1012)
[41 FR 9158, Mar. 3, 1976. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

WReier-Aviles on DSKGBLS3C1PROD with CFR

11 Temporary investments.
(a) This account shall include the
cost of securities and other collectible
obligations acquired for the purpose of
temporarily investing cash, such as
United States Treasury certificates,
marketable securities, time drafts receivable, demand loans, time deposits
with banks and trust companies, and
other similar investments of a temporary character. This account shall
also include unrealized holding gains
and losses on trading and available-forsale types of security investments.
(b) This account shall be subdivided
to reflect the marketable equity securities’ portion and other temporary investments. (See Instruction 1–15).
[Order 627, 67 FR 67706, Nov. 6, 2002]

12 Notes receivable.
This account shall include the book
cost, not includible elsewhere, of all

collectible obligations in the form of
notes receivable, contracts receivable,
and similar evidences (except interest
coupons) of money receivable on demand or within a time not exceeding
one year from date of the balance
sheet. Notes receivable from affiliates
shall be included in account 13, Receivables from Affiliated Companies.
13 Receivables from affiliated companies.
(a) This account shall include
amounts receivable due and accrued
from affiliated companies subject to
settlement within one year from date
of the balance sheet. This includes receivables for items such as revenue for
services rendered, material furnished,
rent, interest and dividends, advances
and notes.
(b) An oil pipeline company participating in a cash management program
must maintain supporting documentation for all deposits into, borrowings
from, interest income from, and interest expense to such program. Cash
management programs include all
agreements in which funds in excess of
the daily needs of the oil pipeline company along with the excess funds of the
oil pipeline company’s parent, affiliated and subsidiary companies are concentrated, consolidated, or otherwise
made available for use by other entities within the corporate group. The
written documentation must include
the following information:
(1) For deposits with and withdrawals
from the cash management program:
The date of the deposit or withdrawal,
the amount of the deposit or withdrawal, and the maturity date, if any,
of the deposit;
(2) For borrowings from a cash management program: The date of the borrowing, the amount of the borrowing,
and the maturity date, if any, of the
borrowing;
(3) The security, if any, provided by
the cash management program for repayment of deposits into the cash management program and the security required, if any, by the cash management
program in support of borrowings from
the program; and
(4) The monthly balance of the cash
management program.

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Federal Energy Regulatory Commission
(c) The oil pipeline company must
maintain current and up-to-date copies
of the documents authorizing the establishment of the cash management
program including the following:
(1) The duties and responsibilities of
the administrator and the oil pipeline
company in the cash management program;
(2) The restrictions on deposits or
borrowings by oil pipeline companies
in the cash management program;
(3) The interest rate, including the
method used to determine the interest
earning rates and interest borrowing
rates for deposits into and borrowings
from the program; and
(4) The method used to allocate interest income and expenses among oil
pipeline companies in the program.
[32 FR 20241, Dec. 20, 1967, as amended by
Order 634, 68 FR 40509, July 8, 2003; Order 634–
A, 68 FR 62004, Oct. 31, 2003]

14 Accounts receivable.
This account shall include amounts
receivable due and accrued from other
than affiliates which are subject to settlement within one year from date of
the balance sheet. This includes items
such as revenue for services rendered,
material furnished, rent, accounts of
officers and employees, miscellaneous
accounts with others.
14–5
Accumulated
provision
for
uncollectible accounts.
This account shall be credited with
amounts provided for losses on notes
and accounts receivable which may become uncollectible, and also with collections
on
accounts
previously
charged hereto. This account shall be
charged with any amounts which have
been found to be impractical of collection.

WReier-Aviles on DSKGBLS3C1PROD with CFR

[Order 620, 65 FR 81343, Dec. 26, 2000]

15 Interest and dividends receivable.
(a) This account shall include the
amount of interest due and accrued as
of the date of the balance sheet on all
interest-bearing obligations held by
the carrier. This account shall also include the amount of dividends declared
on stocks owned.
(b) Interest and dividends receivable
from affiliated companies or on the

Pt. 352
carrier’s own securities shall not be included in this account.
16 Oil inventory.
(a) This account shall include the
cost of oil purchased and the value of
oil acquired through tariff allowances
and operating gains. Amounts paid preceding carriers for transportation, customs duties, or similar charges shall be
charged to account 230, Allowance Oil
Revenue. Additions to inventory from
tariff allowances shall be credited to
revenue at current value. Additions resulting from operating gains shall be
credited against operating oil losses
and shortages.
(b) The cost or value of oil owned by
the carrier and used to maintain lines
and working tanks in condition for
transportation operations shall be included in account 33, Operating Oil
Supply.
17 Material and supplies.
(a) This account shall include the
cost, including sales, use and excise
taxes and transportation costs to point
of delivery, less purchase and trade discounts, of all unapplied material and
supplies, such as line pipe, line pipe fittings, fuel, tools, and other pipeline
supplies. The value of items being manufactured by the carrier and the fair
value of salvaged material shall also be
included herein.
(b) Carriers shall take annual inventories of material and supplies and
shall make the adjustments necessary
to reconcile the books to the inventory
figures. To the extent practicable, adjustments shall be made directly to the
same accounts to which such material
and supplies were charged during the
period. Differences that cannot be directly allocated shall be equitably apportioned among the accounts to which
material was charged since the last inventory.
18 Prepayments.
This account shall include the
amount of expenses paid in advance of
accrual such as insurance, rent, and
taxes, the benefits of which are to be
realized in subsequent periods. Monthly transfers shall be made to the appropriate expense or other accounts for

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Pt. 352

18 CFR Ch. I (4–1–11 Edition)

the expired portion of the prepayments
applicable to that month.
19 Other current assets.
This account shall include such items
as estimated tax refunds receivable, legally enforceable, balances due on subscriptions to capital stock, temporary
guaranty and other deposits, and all
other current assets due within one
year which are not includible in the
other current asset accounts.
19–5 Deferred income tax assets.
(a) This account shall include the
portion of deferred income tax assets
and liabilities relating to current assets and liabilities, when the balance is
a net debit.
(b) A net credit balance shall be included in Account 59, Deferred income
tax liabilities.
[Order 620, 65 FR 81343, Dec. 26, 2000]

WReier-Aviles on DSKGBLS3C1PROD with CFR

20 Investments in affiliated companies.
This account shall include the cost of
investments in securities (other than
securities held in special funds) and investment advances made to affiliated
companies. Separate records shall be
maintained to show the securities
pledged and the following classes of investments in each affiliated company:
(a) Stocks.
(b) Bonds.
(c) Other secured obligations.
(d) Unsecured notes.
(e) Investment advances.
21 Other investments.
This account shall include the cost of
investments in securities of (other
than securities held in special funds)
and advances made to other than affiliated companies. This account shall
also include unrealized holding gains
and losses on trading and available-forsale types of security investments.
Separate records shall be maintained
to show the securities pledged and the
following classes of investments in
each nonaffiliated company:
(a) Stocks.
(b) Bonds.
(c) Other secured obligations.
(d) Unsecured notes.
(e) Investment advances.
[Order 627, 67 FR 67706, Nov. 6, 2002]

22 Sinking and other funds.
(a) This account shall include cash
and cost of investments in securities
and other assets, trusteed or otherwise
restricted, that have been segregated
in distinct funds for purposes of redeeming outstanding obligations; purchasing or replacing assets; paying
pensions, relief, hospitalization, and
other similar items. This account shall
also include unrealized holding gains
and losses on trading and available-forsale types of security investments. The
cash value of life insurance policies on
the lives of employees and officers to
the extent that the carrier is the beneficiary of such policies shall also be included in this account. Separate subsidiary records shall be maintained for
each distinct fund.
(b) Securities issued or assumed by
the accounting company shall be recorded at par or stated value.
(c) This account shall include compensating balances (see Definition 34)
under an agreement which legally restricts the use of such funds and which
constitute support for long-term borrowing arrangements.
(49 U.S.C. 304, 913, 1012)
[32 FR 20241, Dec. 20, 1967, as amended at 41
FR 9158, Mar. 3, 1976. Redesignated by Order
119, 46 FR 9044, Jan. 28, 1981, and amended by
Order 627, 67 FR 67706, Nov. 6, 2002]

30 Carrier property.
This account shall include the cost of
tangible property used in carrier service, or held for such use within a reasonable time under a definite plan for
pipeline operations. Separate primary
accounts are prescribed for each class
of carrier property.
31 Accrued depreciation—Carrier property.
This account shall be credited with
amounts charged to operating expenses
or other accounts representing the loss
in service value of depreciable carrier
property. The service value of depreciable property retired shall be charged
to this account. It shall also include
other entries as may be authorized by
the Commission. Detail of this account
shall be maintained by primary property accounts. Separate subsidiary
records shall be maintained for the

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Federal Energy Regulatory Commission
amount of accrued cost of removal
other than legal obligations for the retirement of property recorded in account 31, Accrued depreciation—Carrier property.
32 Accrued amortization—Carrier property.
This account shall be credited with
amounts charged to operating expenses
or other accounts representing the loss
in service value of carrier property subject to amortization accounting as authorized by the Commission. Upon the
retirement of property subject to amortization this account shall be
charged with the amount included
herein applicable to the specific property at the time the property is retired. Subsidiary records shall be maintained for each group of property items
under a separate amortization authorization.
33 Operating oil supply.
This account shall include the cost of
oil purchased and the value of oil added
through tariff allowances and operating gains which is used to maintain
lines and tanks in working condition.
Additions to operating supply from tariff allowances shall be credited to revenue at current value. Additions resulting from operating gains shall be
credited against operating oil losses
and shortages.
34 Noncarrier property.
This account shall include the cost of
tangible property not used in carrier
pipeline operations. This account shall
also include, amounts recorded for
asset retirement costs associated with
noncarrier property.
[32 FR 20241, Dec. 20, 1967. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981, and
amended by Order 631, 68 FR 19626, Apr. 21,
2003]

WReier-Aviles on DSKGBLS3C1PROD with CFR

35

Accrued depreciation—Noncarrier
property.

This account shall be credited with
amounts charged to income, representing the loss in service value of
depreciable noncarrier property.

Pt. 352
40 Organization costs and other intangibles.
This account shall include the cost of
intangible assets such as organizing
the carrier, patents, permits, franchises, and goodwill. Organization
costs include the legal expense, taxes,
fees, stationery and printing, original
capital stock expense and costs of economic feasibility studies made prior to
initial operation of the carrier. Separate subsidiary records shall be maintained for each class of intangible
asset.
41 Accrued amortization of intangibles.
This account shall be credited with
the amounts charged to operating expenses or income representing the expired cost of intangible property. When
the period of benefit of intangible property is fully expired, or assets are retired to which the intangible relates,
this account shall be charged with the
amount herein applicable to the specific property.
43 Miscellaneous other assets.
This account shall include such items
as accounts receivable, utility deposits,
guaranty deposits and other similar assets which are not expected to be realized or returned to the carrier within
one year from date of the balance
sheet. The estimated net salvage value
of retired carrier property held without
being dismantled shall be included in
this account.
44 Other deferred charges.
This account shall include items that
cannot be disposed of until further information is received and items of a deferred nature, not provided for elsewhere, to be amortized to expense or
other accounts in future periods. This
includes such items as engineering surveys and studies and debt expense.
45 Accumulated deferred income tax assets.
This account shall include the
amount of deferred taxes determined in
accordance with instruction 1–12 and
the text of Account 64, Accumulated
deferred income tax liabilities, when
the balance is a net debit.
[Order 620, 65 FR 81343, Dec. 26, 2000]

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Pt. 352

18 CFR Ch. I (4–1–11 Edition)

46 Derivative instrument assets.
This account shall include the
amounts paid for derivative instruments, and the change in the fair value
of all derivative instrument assets not
designated as cash flow or fair value
hedges. Account 640, miscellaneous income, shall be credited or debited as
appropriate with the corresponding
amount of the change in the fair value
of the derivative instrument.
[Order 627, 67 FR 67706, Nov. 6, 2002]

47 Derivative instrument assets-Hedges.
(a) This account shall include the
amounts paid for derivative instruments, and the change in the fair value
of derivative instrument assets, designated by the utility as cash flow or
fair value hedges.
(b) When a carrier designates a derivative instrument asset as a cash flow
hedge, it will record the change in the
fair value of the derivative instrument
in this account with a concurrent
charge to account 77, accumulated
other comprehensive income, with the
effective portion of the derivative gain
or loss. The ineffective portion of the
cash flow hedge shall be charged to the
same income or expense account that
will be used when the hedged item enters into the determination of net income.
(c) When a carrier designates a derivative instrument as a fair value hedge,
it shall record the change in the fair
value of the derivative instrument in
this account with a concurrent charge
to a subaccount of the asset or liability
that carries the item being hedged. The
ineffective portion of the fair value
hedge shall be charged to the same income or expense account that will be
used when the hedged item enters into
the determination of net income.
[Order 627, 67 FR 67706, Nov. 6, 2002]

WReier-Aviles on DSKGBLS3C1PROD with CFR

50 Notes payable.
This account shall include outstanding obligations in the form of
notes, and other similar evidences of
indebtedness payable on demand or
within one year from the date of issue
except those payable to affiliated companies.

NOTE: This account shall not include obligations due within one year which are intended to be refinanced on a long-term basis.
Long-term refinancing of short-term obligations means; (1) replacement with long-term
obligations or equity securities, or (2) renewal, extension, or replacement with shortterm obligations for an uninterrupted period
extending beyond one year from the balance
sheet date.
The intention to refinance on a long-term
basis shall be supported by the ability to refinance. Evidence of this ability includes either; (1) the actual issuance of a long-term
obligation or equity securities for the purpose of refinancing the short-term obligation, after the balance sheet date but before
the balance sheet is issued, or (2) before the
balance sheet is issued, the existence of a financing agreement which is long-term and
based on terms readily determinable with no
existing violations of its provisions, and with
a lender which is financially capable of honoring the agreement.
(49 U.S.C. 304, 913, 1012)
[32 FR 20241, Dec. 20, 1967, as amended at 41
FR 9163, Mar. 3, 1976. Redesignated by Order
119, 46 FR 9044, Jan. 28, 1981]

51 Payables to affiliated companies.
This account shall include amounts
payable due and accrued to affiliated
companies (except interest and dividends) subject to settlement within one
year from date of the balance sheet,
and for which arrangements for longterm refinancing have not been made
(See Note following account 50, ‘‘Notes
Payable’’). This includes payables for
items such as services and material received, rent, advances and notes.
(49 U.S.C. 304, 913, 1012)
[41 FR 9163, Mar. 3, 1976. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

52 Accounts payable.
This account shall include amounts
payable due and accrued (except those
to affiliated companies) subject to settlement within one year from the date
of the balance sheet. This includes
payables for items such as joint revenue, material and supplies, services
received, rents, claims, taxes collected
from employees and others for account
of taxing entities, and other similar
items.

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Federal Energy Regulatory Commission
53 Salaries and wages payable.
This account shall include salaries
and wages payable due and accrued including vacation pay and unclaimed
salaries and wages as of the balance
sheet date. Unclaimed salaries and
wages outstanding for more than one
year may be written off to income unless the amount unclaimed escheats to
the state.
54 Interest payable.
This account shall include interest
accrued or payable on all obligations.
55 Dividends payable.
This account shall include the
amount of dividends (other than stock
dividends) declared but unpaid as of the
date of the balance sheet.
56 Taxes payable.
This account shall include all Federal, state, and local taxes (except
taxes withheld from employees) accrued and payable, estimated if necessary, as of the balance sheet date.
Prepaid taxes shall be shown as current
assets in account 18, Prepayments.
Subsidiary records shall be maintained
to allow analyses of this account by
matured and unmatured taxes and by
type of tax and taxing entity.
57 Long-term debt payable within one
year.
This account shall include the
amount of long-term debt which will
mature and become payable within one
year from date of the balance sheet for
which arrangements for long-term refinancing have not been made (See note
following account 50, ‘‘Notes Payable’’).
(49 U.S.C. 304, 913, 1012)
[41 FR 9163, Mar. 3, 1976. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

WReier-Aviles on DSKGBLS3C1PROD with CFR

58 Other current liabilities.
This account shall include all other
current liabilities not provided for
elsewhere that are payable within one
year from date of balance sheet.
59 Deferred income tax liabilities.
(a) This account shall include the
portion of deferred income tax assets
and liabilities relating to current as-

Pt. 352
sets and liabilities, when the balance is
a net credit.
(b) A net debit balance shall be included in Account 19–5, Deferred income tax assets.
[Order 620, 65 FR 81343, Dec. 26, 2000]

60 Long-term debt payable after one
year.
This account shall include the total
par value of the carrier’s outstanding
obligations maturing more than one
year from the date of the balance
sheet, including obligations due within
one year which are expected to be refinanced on a long-term basis (See note
following account 52, ‘‘Accounts payable’’). This account shall be divided to
show the face value of (1) debt issued
and actually outstanding, and (2) debt
‘‘nominally issued’’ and ‘‘nominally
outstanding’’. These accounts shall be
further divided by the following classes
of debt: mortgage bonds, collateral
trusts, income bonds, miscellaneous
obligations and nonnegotiable debt to
affiliated companies.
(49 U.S.C. 304, 913, 1012)
[41 FR 9163, Mar. 3, 1976. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

61 Unamortized premium on long-term
debt.
This account shall include the premium received and not yet amortized
on the issuance of long-term debt. The
amount of premium received on each
issue of bonds, mortgages, notes, and
other long-term debt shall be amortized over the life of the debt by credit
to interest expense.
NOTE: Issue costs related to long-term debt
(debt expense) shall be included in account
44. Other deferred charges, and amortized
over the life of the debt by charge to account
660, Miscellaneous income charges.
[32 FR 20241, Dec. 20, 1967, as amended at 41
FR 52467, Nov. 30, 1976. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

62 Unamortized discount and interest
on long-term debt.
This account shall include the
amount of discount on long-term debt,
and the amount of interest expressly
provided for and included in the face

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Pt. 352

18 CFR Ch. I (4–1–11 Edition)

amount of obligations issued or assumed and not amortized as of the balance sheet date. The amount of discount or interest applicable to each
issue of debt obligation shall be amortized over the life of the respective
debt by charge to interest expense.
NOTE: Issue costs related to long-term debt
(debt expense) shall be included in account
44, Other deferred charges, and amortized
over the life of the debt by charge to account
660, Miscellaneous income charges.
[41 FR 52467, Nov. 30, 1976. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

63 Other noncurrent liabilities.
(a) This account shall include such
items as deferred revenue from rents or
leases that will not be realizable as income within one year, and the liability
for amounts contributed by employees
or others for pensions, savings, and
similar items. This account shall also
include the amount accrued for pensions in which the employees have a
vested right and which are administered by the carrier.

WReier-Aviles on DSKGBLS3C1PROD with CFR

[32 FR 20241, Dec. 20, 1967, as amended at 39
FR 33344, Sept. 17, 1974. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

64 Accumulated deferred income tax liabilities.
(a) This account shall be credited
(charged) with amounts concurrently
charged (credited) to account 671, Provision for deferred taxes and account
696, Provision for deferred taxes—extraordinary items, representing the net
tax effect of changes in material temporary differences (see definition 30(e))
during the current accounting period.
(b) This account shall be credited
with the amount of investment tax
credit utilized in the current year for
income tax purposes but deferred for
accounting purposes (see instruction 1–
12).
(c) This account shall be concurrently debited with amounts credited
to account 671, Provision for deferred
taxes representing amortization of
amounts for investment tax credits deferred in prior accounting periods.
(d) This account shall be maintained
in such a manner as to show separately: (1) The balance of deferred income taxes and deferred investment
tax credit separately as of the begin-

ning and as of the end of each year entries are made affecting the account
balance, (2) the current years net credit or charges applicable to temporary
differences and deferred investment tax
credits.
NOTE A: The portion of deferred assets and
liabilities relating to current assets and liabilities should likewise be classified as current and included in Account 19–5, Deferred
Income Tax Assets, or Account 59, Deferred
Income Tax Liabilities, as appropriate.
NOTE B: This account shall include a net
credit balance only. A net debit balance shall
be recorded in Account 45, Accumulated deferred income tax assets.
[39 FR 33344, Sept. 17, 1974, as amended at 40
FR 53248, Nov. 17, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981, as amended by Order 620, 65 FR 81343, Dec. 26, 2000]

65 Derivative instrument liabilities.
This account shall include the
change in the fair value of all derivative instrument liabilities not designated as cash flow or fair value
hedges. Account 660, miscellaneous income charges, shall be debited or credited as appropriate with the corresponding amount of the change in
the fair value of the derivative instrument.
[Order 627, 67 FR 67706, Nov. 6, 2002]

66

Derivative instrument liabilitiesHedges.
(a) This account shall include the
change in the fair value of derivative
instrument liabilities designated by
the carrier as cash flow or fair value
hedges.
(b) A carrier shall record the change
in the fair value of a derivative instrument liability related to a cash flow
hedge in this account, with a concurrent charge to account 77, accumulated
other comprehensive income, with the
effective portion of the derivative gain
or loss. The ineffective portion of the
cash flow hedge shall be charged to the
same income or expense account that
will be used when the hedged item enters into the determination of net income.
(c) A carrier shall record the change
in the fair of a derivative instrument
liability related to a fair value hedge
in this account, with a concurrent
charge to a subaccount of the asset or

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Federal Energy Regulatory Commission
liability that carries the item being
hedged. The ineffective portion of the
fair value hedge shall be charged to the
same income or expense account that
will be used when the hedged item enters into the determination of net income.
[Order 627, 67 FR 67706, Nov. 6, 2002]

WReier-Aviles on DSKGBLS3C1PROD with CFR

67 Asset retirement obligations.
(a) This account shall include liabilities arising from the recognition of
asset retirement obligations. The carrier shall credit account 67, Asset retirement obligations, for the liabilities
for asset retirement obligations and
charge the appropriate carrier property
accounts or noncarrier property accounts to record the related asset retirement costs.
(b) This account shall also include
the period to period changes for the accretion of the liabilities in account 67,
Asset retirement obligations. The carrier shall charge the accretion expense
to account 591, Accretion expense, for
carrier property, and account 620, Income (net) from noncarrier property,
for noncarrier property, as appropriate,
and credit account 67, Asset retirement
obligations.
(c) This account shall be debited with
amounts paid to settle the asset retirement obligations recorded herein.
(d) The utility shall clear from this
account any gains or losses resulting
from the settlement of asset retirement obligations in accordance with
the instructions prescribed in General
Instruction 1–19.

Pt. 352
issued and outstanding, and (2) nominally issued and nominally outstanding.
(c) When an issue of capital stock or
any part thereof is reacquired, either
by purchase or donation, and is retired
or cancelled, the par value shall be
charged to this account. Any excess of
reacquisition cost over par value shall
be allocated between account 73, Additional Paid-in-Capital and 720, Other
Debits to Retained Income. Any excess
of par value over reacquisition cost
shall be credited to account 73, Additional Paid-in-Capital.
(d) When an issue of capital stock or
any part thereof is reacquired, either
by purchase or donation, and is not retired or cancelled, nor properly includible in sinking or other funds, the reacquisition cost shall be charged to account 76, Treasury Stock.
(e) When treasury stock is resold, account 76, Treasury Stock, shall be credited with the cost paid for it. Gains
shall be credited to account 73, Additional Paid-in-Capital. Losses shall be
charged to account 73, Additional Paidin-Capital to the extent that previous
net gains from sales or retirements of
the same class of stock are included
therein; otherwise, to account 720,
Other Debits to Retained Income.
[40 FR 44562, Sept. 29, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

[Order 631, 68 FR 19626, Apr. 21, 2003]

71 Premiums on capital stock.
This account shall include the excess
of the actual cash value of the consideration received at the time of the
original sale over the par or stated
value of the stock issued.

70 Capital stock.
(a) This account shall include the par
value of par value stock, stated value
of no-par stock, and the amount received for no-par stock without stated
value, which have been issued to bona
fide purchasers and have not been reacquired and cancelled, also shares of
stock nominally issued. When other
than cash is received for no-par value
stock, the fair market value of the consideration shall be entered in this account.
(b) This account shall be divided so
as to show separately each class of
stock issued, subdivided between (1)

72 Capital stock subscriptions.
This account shall include the full
amount of the par value, stated value,
or price agreed upon for no-par stock
which has been subscribed under a legally binding purchase agreement. The
difference between the par value or
stated value, plus any premiums or the
amount agreed upon for no-par stock,
and the down payment or installments
received, shall be recorded as a current
asset in account 19, Other Current Assets. Appropriate subaccounts shall be
kept to record separately the transactions for each class and series of
stock involved.

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Pt. 352

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73 Additional paid-in capital.
This account shall include gains from
purchase and resale of reacquired
stock. Credits attributable to reductions in the par or stated value of capital stock may be included in this account only when approved by the Commission. Separate subaccounts shall be
maintained for each class and series of
stock. Also include herein contributions to capital made by stockholders
and others.
74 Appropriated retained income.
This account shall include retained
income which has been appropriated
and set aside under contractual or
legal requirements and for other specific purposes, such as the retirement
of bonded indebtedness, contingencies,
redemption of preferred capital stock;
fire losses; plant replacement and additions; miscellaneous employee benefits;
and similar items. Appropriations shall
be released when their respective purposes have been served. Separate subaccounts shall be maintained for each
specific purpose for which retained income is appropriated.
75 Unappropriated retained income.
(a) This account shall include retained income which has not been appropriated or set aside for specific purposes. There shall be no transfers to or
from account 73, Additional Paid-in
Capital, to this account unless so authorized by the Commission.
(b) The balance of accounts 700 to 750,
inclusive, shall be closed to this account at the end of each calendar year.
[32 FR 20241, Dec. 20, 1967, as amended at 34
FR 15483, Oct. 4, 1969; 37 FR 17714, Aug. 31,
1972. Redesignated by Order 119, 46 FR 9044,
Jan. 28, 1981]

WReier-Aviles on DSKGBLS3C1PROD with CFR

76 Treasury stock.
(a) This account shall include in subdivisions for each class the reacquisition cost of capital stock which has
been actually issued or assumed by the
carrier, then reacquired, and is neither
retired nor cancelled, nor properly includible in sinking or other funds.
(b) This account shall be maintained
to reflect separately securities pledged
or unpledged.

(c) This account shall be shown on
the Balance Sheet as a deduction in arriving at Stockholders’ Equity.
NOTE A: The accounting for the reacquisition of capital stock and resale thereof shall
be in accordance with balance sheet account
70, paragraphs (c) through (e).
[40 FR 44562, Sept. 29, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

77 Accumulated other comprehensive
income.
(a) This account shall include revenues, expenses, gains, and losses that
are properly includable in other comprehensive income during the period.
Examples of other comprehensive income include foreign currency items,
minimum pension liability adjustments, unrealized gains and losses on
certain investments in debt and equity
securities, and cash flow hedges.
Records supporting the entries to this
account shall be maintained so that
the utility can furnish the amount of
other comprehensive income for each
item included in this account.
(b) This account shall also be debited
or credited, as appropriate, with
amounts of accumulated other comprehensive income that have been included in the determination of net income during the period and in accumulated other comprehensive income in
prior periods. Separate records for each
category of items shall be maintained
to identify the amount of the reclassification adjustments from accumulated
other comprehensive income to earnings made during the period.
[Order 627, 67 FR 67706, Nov. 6, 2002]

CARRIER PROPERTY ACCOUNTS
The following table lists the prescribed primary property accounts and
indicates those accounts which contain
similar items of property for which a
single text is provided. The accounts
are to be kept separately for crude oil
lines and for product lines.
Account number
Gathering
Lines

Trunk
Lines

101
102
103
104

151
152
153
154

Account Title

General
171
..........
..........
..........

Land.
Right of Way.
Line Pipe.
Line Pipe Fittings.

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Federal Energy Regulatory Commission

structed by it shall be included in this
account.

Account number
Gathering
Lines

Trunk
Lines

105
106
107
108
109
110
111
112
113
114
115
116

General

Account Title

155
156
157
158
159
160
161
162
163
164
165

..........
176
..........
..........
179
..........
..........
..........
183
184
185

166
..........

186
187

Pipeline Construction.
Buildings.
Boilers.
Pumping Equipment.
Machine Tools and Machinery.
Other Station Equipment.
Oil Tanks.
Delivery Facilities.
Communication Systems.
Office Furniture and Equipment.
Vehicles and Other Work Equipment.
Other Property.
Construction Work in Progress.

101, 151, 171 Land.

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Pt. 352

(a) This account shall include the
cost of land held in fee and used in
pipeline operations. Land not used in
carrier service shall be recorded in account 34, Noncarrier Property. Irregular parcels of land without commercial value acquired with rights of way
shall not be transferred to account 34
solely to make right of way boundries
regular.
(b) The cost of land and buildings acquired together shall be equitably separated and recorded. When land is acquired with buildings, structures, or
other encumbrances that must be removed before the land is usable, demolition cost, less salvage, shall be added
to the book cost of the land. Net proceeds from the sale of timber, minerals
and improvements which were part of
the land cost when purchased by the
carrier, shall be credited to this account up to the amount of the purchase
price allocated as their cost. Any excess shall be credited to account 640,
Miscellaneous Income.
(c) Costs of filing, clearing, grading
or leveling land, when such work is not
directly associated with construction
or a definite plan for construction,
shall be charged to this account.
(d) All direct or incidental costs associated with the acquisition of the land
and any taxes and public assessments
assumed at the time of purchase, shall
be included in this account.
(e) Special assessments for public improvements and also costs borne by the
carrier for public improvements con-

[32 FR 20241, Dec. 20, 1967, as amended at 40
FR 53248, Nov. 17, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

102, 152 Right of way.
This account shall include the cost of
obtaining rights of way used in pipeline
operations. Periodic rents paid for the
use of a right of way shall be charged
to operating rents. Costs of filling,
clearing, grading or leveling of a right
of way when such work is not directly
associated with construction or a definite plan for construction, shall be
charged to this account.
103, 153 Line pipe.
This account shall include the cost of
all line pipe actually laid in pipe lines
devoted to transportation service.
104, 154 Line pipe fittings.
This account shall include the cost of
the line pipe fittings, including manifolds, used in pipe lines devoted to
transportation service.
105, 155 Pipeline construction.
(a) This account shall include all the
costs of constructing pipe lines except
the cost of line pipe and fittings provided for in accounts 103, 153, Line
Pipe, and 104, 154, Line Pipe Fittings.
(b) Includible shall be the cost of
labor and materials such as casing and
vent pipe, pipe coatings of all kinds,
river weights, support structures, sand
bags, valve boxes, cathodic protection
devices, mile posts, right-of-way markers, excavating and backfilling, pipeline pits, and the cost of damages paid
for the destruction of crops, timber,
and other property during construction. The cost of reopening the trenches for repairs, or installation of casing,
coating or cathodic protection, and the
necessary backfilling shall be charged
to maintenance expense.
106, 156, 176 Buildings.
This account shall include the cost of
all buildings including the foundations,
fixtures, and appurtenances thereto.
This includes such items as architects’

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Pt. 352

18 CFR Ch. I (4–1–11 Edition)

fees, sidewalks, driveways, fences, permanent water rights, grading and preparing grounds before and after construction, utility lines and other service piping. Cost of restoring grounds
after repair work shall be charged to
maintenance expense.

racks and on wharves, the construction
of oil-pipe lines between oil tanks and
delivery facilities, and the carrier’s investment in tracks if located at and
used in connection with delivery facilities.
113, 163, 183 Communication systems.

107, 157 Boilers.
This account shall include the cost of
boilers, including accessories and attachments such as injectors, water
gages, steam gages and fittings, and
the cost of special boiler foundations
and installations.
108, 158 Pumping equipment.
This account shall include the cost of
engines, motors, pumps, and all other
pumping equipment, and the cost of
special foundations and installation.
109, 159, 179 Machine tools and machinery.
This account shall include the cost of
machine tools and machinery, including the cost of their special foundations and installation.
110, 160 Other station equipment.
This account shall include the cost of
all station equipment not provided for
elsewhere, such as electric light, gas,
and refrigeration equipment, manifolds, and miscellaneous equipment
and fittings. It shall also include the
carrier’s investment in tracks if located at and used in connection with a
station.

WReier-Aviles on DSKGBLS3C1PROD with CFR

111, 161 Oil tanks.
This account shall include the cost of
oil tanks, including grades, roofs, fire
banks, steam coils, swing pipes, inlet
valves, and outlet valves.
112, 162 Delivery facilities.
This account shall include the cost of
facilities for receiving or delivering oil
and oil products from or to water carriers, railroads, motor carriers, and
others, such as delivery racks, wharves
(including buildings thereon), docks,
and slips, including piling, pile protection, cribs, cofferdams, walls, and other
necessary devices and apparatus for the
operation or protection of such property. It shall also include the cost of
engines, pumps, and boilers at loading

This account shall include the cost of
telegraph, wireless, telephone, and
radio equipment.
114, 164, 184 Office furniture and equipment.
This account shall include the cost of
all office furniture, equipment and fixtures, including such items as safes,
desks, chairs, typewriters, accounting
machines, cabinets, file cabinets, floor
coverings, portable air conditioners,
drinking fountains, and other similar
items that are not an integral part of a
building.
115, 165, 185 Vehicles and other work
equipment.
This account shall include the cost of
motor and other vehicles, motor and
other portable work equipment, garage
equipment, and portable tools and machines such as drills, hoists, jacks,
power mowers, stocks and dies, laying
tongs, vises, air compressors, welding
machines, valve reseating machines,
pipe-cleaning machines, and concrete
mixers, not specifically provided for in
other accounts.
116, 166, 186 Other property.
This account shall include the cost of
property used in pipeline operations
not provided for elsewhere.
117, 167, 186.1 Asset retirement costs.
This account shall include asset retirement costs on plans included in
carrier property.
187 Construction work in progress.
This account shall include the cost of
carrier property under construction
and the cost of land acquired for such
construction as of the date of the balance sheet. It includes interest and
taxes during construction, material
and supplies delivered to the construction site, and other expenditures that
will eventually be part of the cost of

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Federal Energy Regulatory Commission
the completed property. When construction work is completed, the cost
included in this account shall be transferred to the appropriate primary property accounts. Subsidiary records shall
be maintained for each construction
project. When part of a project under
construction is completed and put into
service, the costs applicable to that
portion shall be transferred to the appropriate property account.
OPERATING REVENUES
200 Gathering revenues.
This account shall include revenues
on the basis of tariff charges for the
gathering or collection of crude oil, oil
products and other commodities.
210 Trunk revenues.
This account shall include revenues
on the basis of tariff charges for trunk
line transportation of crude oil, oil
products or other commodities.
220 Delivery revenues.
This account shall include revenues
on the basis of tariff charges for receiving, delivering, unloading and loading
fees at carrier terminal and delivery
facilities.
230 Allowance oil revenue.
(a) This account shall include the
current value of oil acquired through
tariff allowances taken into inventory
or retained in the line for operating oil
supply, and the selling price of such oil
sold not previously recorded in inventory or operating oil supply.
(b) Profits and losses on sales of allowance oil from inventory or operating supply shall be included in this
account.

WReier-Aviles on DSKGBLS3C1PROD with CFR

240 Storage and demurrage revenue.
This account shall include revenues
on the basis of tariff charges for the
storage of oil; also demurrage charges
incident to failure of consignees to receive shipments promptly.
250 Rental revenue.
This account shall include the revenues from renting or subrenting property, the cost of which is included in
the accounts for investment in carrier
property.

Pt. 352
260 Incidental revenue.
This account shall include revenues
incidental to carrier operations and
not includible in other revenue accounts.
OPERATING EXPENSES
Operations and Maintenance
300 Salaries and wages.
This account shall include the salaries and wages (including pay for holidays, vacations, sick leave and similar
payroll disbursements) of supervisory
and other personnel directly engaged in
transportation operations and the
maintenance and repair of transportation property.
[Order 620, 65 FR 81343, Dec. 26, 2000]

310 Materials and supplies.
This account shall include the cost of
materials applied in the repair and
maintenance of transportation property. The salvage value of materials recovered in maintenance work shall be
credited to this account. This account
shall also include the cost of supplies
consumed and expended in operations
and in support of the maintenance activity.
[Order 620, 65 FR 81343, Dec. 26, 2000]

320 Outside services.
This account shall include the cost of
operating and maintenance services
provided by other than company forces
under contract, agreement, and other
arrangement. The cost of service performed by affiliated companies shall be
segregated within the account.
[Order 620, 65 FR 81343, Dec. 26, 2000]

330 Operating fuel and power.
This account shall include the cost of
fuel and power consumed and expended
in operations. The cost of normal utilities services shall be included herein
when such costs are directly allocable
to operations.
340 Oil losses and shortages.
(a) This account shall include the
cost of settlements with shippers for
oil lost or undelivered due to operating

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Pt. 352

18 CFR Ch. I (4–1–11 Edition)

causes during the course of transportation.
(b) The value of oil gains from operations shall be credited to this account
at current value at time of determination of gain and charged to oil inventory or operating supply.
350 Rentals.
This account shall include the cost of
renting property used in the operations
and maintenance of carrier transportation service, such as complete pipeline or segment thereof, office space,
land and buildings, and other equipment and facilities.
[Order 620, 65 FR 81343, Dec. 26, 2000]

390 Other expenses.
This account shall include the expenses of aircraft, vehicles, and work
equipment used in support of operations and maintenance activities;
travel, lodging, meals, memberships,
and other expenses of operating and
maintenance employees; and other related operating and maintenance expenses that are not defined or classified
in other accounts.

530 Rentals.
This account shall include the cost of
renting property used in the administration and general operations of carrier transportation service, such as
complete pipeline or segment thereof,
office space, land and buildings, and
other equipment and facilities.
[Order 620, 65 FR 81343, Dec. 26, 2000]

540 Depreciation and amortization.
This account shall include charges
for the depreciation and amortization
of transportation property. Charges for
the amortization of fixed term intangibles relating to common carrier operations shall also be included herein.
541

Depreciation expense for asset retirement costs.

This account shall include charges
for the depreciation of asset retirement
costs related to transportation property.
[Order 631, 68 FR 19626, Apr. 21, 2003]

550 Employee benefits.

[Order 620, 65 FR 81343, Dec. 26, 2000]

This account shall include the salaries and wages (including pay for holidays, vacations, sick leave, and similar
payroll disbursements) of executives
and general officers, general office personnel, and of other employees whose
wages cannot be directly allocated to
operations or maintenance.

This account shall include the cost to
the carrier of annuities, pensions, and
benefits for active or retired employees, their beneficiaries or designees.
Contributions to health or welfare
funds or payment for similar benefits
to or on behalf of employees shall be
included herein. Premiums, to the extent borne by the carrier, for group
life, health, accident and other beneficial insurance for employees shall
also be included in this account.

510 Materials and supplies.

[Order 620, 65 FR 81343, Dec. 26, 2000]

This account shall include the cost of
materials and supplies consumed and
expended for administration and general services.

560 Insurance.
(a) This account shall include the
cost of commercial insurance to protect the carrier against losses and damages in its pipeline operations such as
injuries to or deaths of employees and
other persons, damages to or destruction of carrier property or the property
of others, and other business risks and
hazards pertaining to transportation
operations.
(b) The carrier shall not accrue
amounts for the purpose of estimating

General
500 Salaries and wages.

[Order 620, 65 FR 81343, Dec. 26, 2000]

520 Outside services.
WReier-Aviles on DSKGBLS3C1PROD with CFR

panies shall be segregated within the
account.

This account shall include the cost of
management and general and administrative services provided by other than
company forces under contract, agreement or other arrangement. The cost
of services performed by affiliated com-

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Federal Energy Regulatory Commission
risk of loss or damage to its property
from fire, theft, or similar loss contingencies not covered by commercial insurance.
NOTE: Insurance or other reimbursement
for loss or damage shall be credited to the
same account charged with the loss or expense.
(49 U.S.C. 304, 913, 1012)
[32 FR 20241, Dec. 20, 1967, as amended at 41
FR 32597, Aug. 4, 1976. Redesignated by Order
119, 46 FR 9044, Jan. 28, 1981]

570 Casualty and other losses.
(a) This account shall include the
amount of expense sustained by the
carrier on account of loss or damage to
oil or other commodity entrusted to it
for transportation or storage resulting
from fire, flood, or other casualty.
(b) Expenses on account of damage
and destruction to property of others
from all causes; and the expense of repairing damages to transportation
property caused by casualty shall also
be included herein.
(c) This account shall also include
expenses incurred on account of injury
to or death of employees or other persons including related medical, hospital and funeral expenses.

Pt. 352
all other incidental general expenses
not defined or classified in other accounts.
[Order 620, 65 FR 81344, Dec. 26, 2000]

591 Accretion expense.
This account shall be charged for accretion expense on the liabilities associated with asset retirement obligations included in account 67, Asset retirement obligations. The carrier shall
record in this account the settlement
amounts for asset retirement obligations related to carrier property in accordance with the accounting prescribed in General Instruction 1–19.
[Order 631, 68 FR 19626, Apr. 21, 2003]

592 Gains or losses on asset retirement
obligations.
The carrier shall record in this account gains or losses resulting from
the settlement amounts for asset retirement obligations related to carrier
property plant. (See General Instruction 1–19).
[Order 631, 68 FR 19626, Apr. 21, 2003]

INCOME ACCOUNTS
Ordinary Items

NOTE: The cost of oil lost or undelivered
through operating causes shall be charged to
account 340, Oil Losses and Shortages.

580 Pipeline taxes.
(a) This account shall include accruals for taxes of all kinds, excepting income taxes (see definition 30(a)), relating to carrier property, operations,
privileges and licenses.
(b) The detail of this account shall
show separately the amounts levied by
the Federal government and by each
state.

WReier-Aviles on DSKGBLS3C1PROD with CFR

[32 FR 20241, Dec. 20, 1967, as amended at 39
FR 33345, Sept. 17, 1974. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

590 Other expenses.
This account shall include the cost of
expenses expended for administrative
and general services including, the expenses of aircraft, vehicles, and work
equipment used for general purposes;
travel, lodging, meals, memberships,
and other expenses of general employees and officers; utilities services; and

CREDIT
600 Operating revenues.
This account shall include the total
revenues included in the operating revenue accounts for the calendar year.
620 Income (net) from noncarrier property.
(a) This account shall include all
noncarrier revenues and expenses from
property carried in account 34, Noncarrier Property.
(b) All expenses related to noncarrier
property, such as operation and maintenance expenses, depreciation, taxes
(except Federal income taxes) and
similar expenses, are includible herein.
630 Interest and dividend income.
(a) This account shall include interest accruing to the carrier on securities of others, loans, notes and advances, deposits, and all other interest
bearing assets. Also include the

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Pt. 352

18 CFR Ch. I (4–1–11 Edition)

amount of amortized premium or discount related to such assets.
(b) This account shall also include
the amount of dividends declared on
stocks of others owned by the carrier.
(c) Income shall not be included in
this account unless receipt thereof is
reasonably assured.
640 Miscellaneous income.
(a) This account shall include income
not provided for elsewhere creditable
to income accounts for the current
year, such as unclaimed wages written
off, profit on sales of land and noncarrier, property, profit on sales of investment securities, profit from company
bonds reacquired, and decreases in the
valuation allowance (contained within
account 11) for the marketable equity
securities included in current assets.
(b) Gains from extinguishment of
debt shall be aggregated and, if material, credited to account 680, Extraordinary Items, upon approval by the
Commission.
[32 FR 20241, Dec. 20, 1967, as amended at 40
FR 53248, Nov. 17, 1975; 42 FR 33298, June 30,
1977. Redesignated by Order 119, 46 FR 9044,
Jan. 28, 1981]

645 Unusual or infrequent items (credit).
Included in this account shall be material items unusual in nature or infrequent in occurrence, but not both, accounted for in the current year in accordance with the text of instruction 1–
6, upon approval by the Commission.
[40 FR 53248, Nov. 17, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

DEBIT

660 Miscellaneous income charges.
(a) This account shall include income
charges not provided for elsewhere
chargeable to income accounts for the
current year, such as amortization of
debt expense, losses on sale or disposition of land and noncarrier property,
losses on sales or reductions in value of
investment securities (including increases in the valuation allowance
within account 11 for the marketable
equity securities included in current
assets), bad debts, losses on company
bonds reacquired, taxes (other than
Federal income taxes) on investment
securities, trust management expenses,
amortization of intangibles which are
not restricted to a fixed term, and the
difference between the premium and
the added cash surrender value of life
insurance on officers and employees
when the carrier is beneficiary.
(b) Losses from extinguishment of
debt shall be aggregated and, if material, charged to account 680, Extraordinary Items, upon approval by the
Commission.
[32 FR 20241, Dec. 20, 1967, as amended at 37
FR 17714, Aug. 31, 1972; 40 FR 53248, Nov. 17,
1975; 42 FR 33298, June 30, 1977. Redesignated
by Order 119, 46 FR 9044, Jan. 28, 1981]

665 Unusual or infrequent items (debit).
Included in this account shall be material items unusual in nature or infrequent in occurrence, but not both, accounted for in the current year in accordance with the text of instruction 1–
6, upon approval by the Commission.
[40 FR 53248, Nov. 17, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

610 Operating expenses.
This account shall include the total
expenses included in the operating expense accounts for the calendar year.
650 Interest expense.

WReier-Aviles on DSKGBLS3C1PROD with CFR

for the carrier shall not be recorded in
this account.

This account shall include interest
expense on all classes of debt except interest pertaining to construction of
property. This account shall also include the amortization of long-term
debt premium and discount. Charges
for interest on carrier debt obligations
previously issued and now held by or

670 Income taxes on income from continuing operations.
(a) This account shall be debited with
the monthly accruals for all income
taxes which are estimated to be payable and which are applicable to ordinary income (see instruction 1–12). See
the texts of account 695, Income Taxes
on Extraordinary Items, account 710,
Other Credits to Retained Income, and
account 720, Other Debits to Retained
Income, for recording other income tax
consequences.

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Federal Energy Regulatory Commission
(b) Details pertaining to the tax consequences of other unusual and significant items, and also cases where tax
consequences are disproportionate to
related amounts included in income accounts, shall be submitted to the Commission for consideration and decision
as to proper accounting.
(Interstate Commerce Act, 49 U.S.C. 20 (1976),
Department of Energy Organization Act, 42
U.S.C. 7155, 7172(b), 7295(a) (Supp. I 1977); E.
O. 12009, 42 FR 46267 (1977); Federal Energy
Regulatory Commission, Order No. 1, 42 FR
55450 (1977))
[32 FR 20241, Dec. 20, 1967, as amended at 39
FR 33345, Sept. 17, 1974; 40 FR 53248, Nov. 17,
1975; 44 FR 72161, Dec. 13, 1979. Redesignated
by Order 119, 46 FR 9044, Jan. 28, 1981]

671 Provision for deferred taxes.
(a) This account shall include the net
tax effect of changes in material temporary timing differences (see definition 30(e)) during the current accounting period, and the future tax benefits
of loss carryforwards recognized in accordance with instruction 1–12(c).
(b) This account shall include credits
for the amortization of the investment
tax credit if the carrier elected to use
the deferred method of accounting for
the investment tax credit. (See instruction 1–12(d)).
[39 FR 33345, Sept. 17, 1974. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981, as amended by Order 620, 65 FR 81344, Dec. 26, 2000]

DISCONTINUED OPERATIONS
675 Income (loss) from operations of
discontinued segments.
This account shall include the results
of operations of a segment of a business
(see definition 32(a)), after giving effect
to income tax consequences that has
been or will be discontinued in accordance with the text of instruction 1–6,
upon approval by the Commission.

WReier-Aviles on DSKGBLS3C1PROD with CFR

[40 FR 53249, Nov. 17, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

676 Gain (loss) on disposal of discontinued segments.
This account shall include the gain
or loss from the disposal of a segment
of a business, after giving effect to income tax consequences, in accordance

Pt. 352
with the text of instruction 1–6, upon
approval by the Commission.
[40 FR 53249, Nov. 17, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

EXTRAORDINARY ITEMS AND ACCOUNTING
CHANGES
680 Extraordinary items (net).
(a) This account shall include extraordinary items accounted for during
the current accounting year in accordance with the text of instruction 1–6,
upon submission of a letter from the
carrier’s independent accountants, approving or otherwise commenting on
the item and upon approval by the
Commission.
(b) This account shall be maintained
in a manner sufficient to identify the
nature and gross amount of each debit
and credit.
(c) Federal income tax consequences
of charges and credits to this account
shall be recorded in account 695, Income Taxes on Extraordinary Items, or
account 696. Provision for Deferred
Taxes—Extraordinary Items, as applicable.
[40 FR 53249, Nov. 17, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

695

Income taxes on extraordinary
items.
This account shall include the estimated income tax consequences (debit
or credit) assignable to the aggregate
of items of both taxable income and deductions from taxable income which
for accounting purposes are classified
extraordinary, and are recorded in account 680, Extraordinary Items (Net).
The tax effect of any temporary differences caused by recognizing an item
in the account provided for extraordinary items shall be included in
acount 696, Provision for Deferred
Taxes—Extraordinary Items.
[40 FR 53249, Nov. 17, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981, as amended by Order 620, 65 FR 81344, Dec. 26, 2000]

696 Provision for deferred taxes—extraordinary items.
This account shall include the deferred tax expense or benefit related to
temporary differences applicable to
items of revenue or expense included in

977

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Pt. 352

18 CFR Ch. I (4–1–11 Edition)

account 680, Extraordinary Items (Net)
(See instruction 1–12).

such inclusion has been authorized by
the Commission.

[40 FR 53249, Nov. 17, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981, as amended by Order 620, 65 FR 81344, Dec. 26, 2000]

740 Appropriations of retained income.

697 Cumulative effect of changes in accounting principles.
This account shall include the cumulative effect of changing to a new accounting principle, after giving effect
to income tax consequences, in accordance with instruction 1–6, upon approval by the Commission.
[40 FR 53249, Nov. 17, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

RETAINED INCOME ACCOUNTS
700 Net balance transferred from income.
This account shall include net income (or deficit) for the calendar year.
705 Prior period adjustments to beginning retained income account.
This account shall include adjustments after giving income tax effect,
in accordance with the text of instruction 1–6, to the balance in the retained
income account at the beginning of the
calendar year, upon approval by the
Commission.
[40 FR 53249, Nov. 17, 1975. Redesignated by
Order 119, 46 FR 9044, Jan. 28, 1981]

710 Other credits to retained income.
This account shall include other
credit adjustments, net of assigned
Federal income taxes, not provided for
elsewhere in this system but only after
such inclusion has been authorized by
the Commission.

WReier-Aviles on DSKGBLS3C1PROD with CFR

720 Other debits to retained income.
This account shall include losses
from resale of reacquired capital stock,
and charges which reduce or write off
discount on capital stock issued by the
company, but only to the extent that
such charges exceed credit balances in
account 73, Additional Paid-In Capital,
for shares reacquired. This account
shall also include other debit adjustments, net of assigned Federal income
taxes, not provided for elsewhere in
this system of accounts, but only after

This account shall include appropriations made from retained income during the calendar year. Appropriations
charged to this account shall be credited to account 74, Appropriated Retained Income.
750

Dividend appropriations
tained income.

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This account shall include the
amount of dividends declared during
the calendar year on all classes of outstanding capital stock. Stock reacquired and owned by the carrier shall
not be subject to dividends. Subsidiary
records shall be kept to show separately the dividends declared on each
type and class of capital stock. When
dividends are paid in other than
money, complete detail of each transaction shall be maintained.
797 Form of Balance Sheet Statement
ASSETS
CURRENT ASSETS

10 Cash.
10.5 Special deposits.
11 Temporary Investments.
12 Notes Receivable.
13 Receivables from Affiliated Companies.
14 Accounts Receivable.
15 Interest and Dividends Receivable.
16 Oil Inventory.
17 Material and Supplies.
18 Prepayments.
19 Other Current Assets.
19–5 Deferred Income Tax Charges.
Total current assets.
INVESTMENTS AND SPECIAL FUNDS
20
21
22
23
24

Investments in Affiliated Companies.
Other Investments.
Sinking and Other Funds.
Reductions in Security Values—Credit.
Allowance for Net Unrealized Loss on
Noncurrent Marketable Equity Securities—Credit.
Total investments and special funds.

30
31
32
33
34

Carrier Property.
Accrued Depreciation—Carrier Property.
Accrued Amortization—Carrier Property.
Operating Oil Supply.
Noncarrier Property.

TANGIBLE PROPERTY

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Federal Energy Regulatory Commission
35

Accrued Depreciation—Noncarrier Property.
Total tangible property.

Pt. 352
798

Form of Income Statement
INCOME STATEMENT
ORDINARY ITEMS

OTHER ASSETS AND DEFERRED CHARGES
40
41
43
44
45

Organization Costs and Other Intangibles.
Accrued Amortization of Intangibles.
Miscellaneous Other Assets.
Other Deferred Charges.
Accumulated
deferred
income
tax
charges.
Total other assets and deferred
charges.
Total Assets.
Liabilities and Stockholders’ Equity

Carrier Operating Income
600
610

Operating Revenues.
Operating Expenses.
Net carrier operating income.
Other Income and Deductions

620
630

Income (Net) from Noncarrier Property.
Interest and Dividend Income (dividends
from other than affiliates).
Miscellaneous Income.
Unusual or Infrequent Items (Credit).
Interest Expense.
Miscellaneous Income Charges.
Income from affiliated companies.
Dividends.
Equity in undistributed earnings.
(losses)
Total other income and deductions.
Unusual or Infrequent Items (Debit).
Federal Income Taxes on Income from
Continuing Operations.
Provision for deferred taxes.

640
645
650
660

LIABILITIES
CURRENT LIABILITIES

50 Notes Payable.
51 Payables to Affiliated Companies.
52 Accounts Payable.
53 Salaries and Wages Payable.
54 Interest Payable.
55 Dividends Payable.
56 Taxes Payable.
57 Long-Term Debt Payable Within One
Year.
58 Other Current Liabilities.
59 Deferred income tax credits.
Total current liabilities.
NONCURRENT LIABILITIES

60
61
62
63
64

Long-Term Debt Payable After One Year.
Unamortized Premium on Long-Term
Debt.
Unamortized Discount and Interest on
Long-term Debt.
Other Noncurrent Liabilities.
Accumulated deferred income tax credits.
Total noncurrent liabilities.
Total Liabilities.

665
670
671

DISCOUNTINUED OPERATIONS

675

Income (Loss) from Operations of Discontinued Segments. (Less Applicable Income Taxes of $ll).
676 Gain (Loss) from Disposition of Discontinued Segments (Less Applicable Income Taxes of $ll).
Income (Loss) before Extraordinary
Items.
EXTRAORDINARY ITEMS AND ACCOUNTING
CHANGES

680 Extraordinary items (net).
695 Income Taxes on Extraordinary Items.
696 Provision for Deferred Taxes—Extraordinary Items.
TOTAL EXTRAORDINARY ITEMS

697

Cumulative Effect of Changes in Accounting Principles (Less Applicable Income Taxes of $ll).
Net Income (Loss).

799

Form of Unappropriated Retained
Income Statement

WReier-Aviles on DSKGBLS3C1PROD with CFR

STOCKHOLDERS’ EQUITY
70 Capital Stock.
71 Premiums on Capital Stock.
72 Capital Stock Subscriptions.
73 Additional Paid-In Capital.
74 Appropriated Retained Income.
75 Unappropriated Retained Income.
75–5 Unrealized Loss on Noncarrier Marketable Equity Securities.
Total Stockholders’ Equity.
Total Liabilities and Stockholders’
Equity.
76 Treasury stock.
Total Stockholders’ Equity.

Unappropriated Retained Income Statement
75
700
705
710
720
740
750

Unappropriated retained income (beginning of year).
Net balance transferred from income.
Prior Period Adjustments to Beginning
Retained Income Account.
Other credits to retained income.
Other debits to retained income.
Appropriations of retained income.
Dividend appropriations of retained income.

979

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Pt. 352
75

18 CFR Ch. I (4–1–11 Edition)

Unappropriated retained income (end of
year).

WReier-Aviles on DSKGBLS3C1PROD with CFR

[32 FR 20241, Dec. 20, 1967, as amended at 37
FR 17714, Aug. 31, 1972; 39 FR 33345, Sept. 17,
1974; 39 FR 34044, Sept. 23, 1974; 40 FR 53249,
Nov. 17, 1975; 41 FR 52467, Nov. 30, 1976; 42 FR
33298, June 30, 1977. Redesignated by Order
119, 46 FR 9044, Jan. 28, 1981]

980

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