Current through Register Vol. 48, No. 38, September 20, 2024
Add the following material as Accounting Instruction 39,
"Transition Rules - Contribution in Aid of Construction":
"A. The transition rules are to govern the
accounting for Contributions in Aid of Construction. They are based on the premise
that the integrity of the 'Contribution' account was preserved during the period
encompassed by the Commission's ratemaking policy of allowance of depreciation
expense as a recoverable operation expense on property which was the contra to the
'Contribution' account.
B. The rules
provide for recording the impairment of the 'Contribution' account which occurred
subsequent to the change in Commission policy of disallowance of depreciation
expense on 'contributed property' for ratemaking purposes.
1. Subsidiary records will be maintained for
Account 271, 'Contributions in Aid of Construction' and Account 272, 'Accumulated
Amortization of Contributions in Aid of Construction.'
Subsidiary accounts of Account 271 shall segregate the
Contributions in Aid of Construction recorded prior to the change in ratemaking
policy from amounts recorded subsequent thereto.
The subsidiary accounts of Account 272 shall be maintained to
provide a segregation of the accumulated amortization charges which relate to or
correlate to the 'Contribution' segregated balances.
The 'pre' and 'post' segregation categories will coincide with the
effective date of the first definitive Commission order applicable to the subject
utility which applies the ratemaking disallowance policy.
2. Utilities that discontinued recording
depreciation expense in their books of account subsequent to its disallowance for
ratemaking purposes shall record the impairment of the 'Contribution' account for
the period from date of disallowance to December 31, 1986 by debit Account 272,
'Accumulated Amortization of Contributions in Aid of Construction' and credit to the
appropriate subaccount of Account 108, 'Accumulated Depreciation.'
3. Utilities that continued to record depreciation
expense in their books of account subsequent to its disallowance for ratemaking
shall record the impairment of the 'Contribution' account by debit to Account 272,
'Accumulated Amortization of Contributions in Aid of Construction' and credit to
Account 439, 'Adjustments to Retained Earnings.' It shall cover the period from date
of disallowance to December 31, 1986.
4.
The amortization of the 'Pre' disallowance balance of Account 271 shall continue
until it is fully amortized at which time it shall be written off against its
related Account 272 balance.
5. Within
six months of the effective date of this System of Accounts (83 Ill. Adm. Code 650),
each utility shall submit its proposed journal entries for recording the
implementation of the transition rules to the Director of Accounting of the
Commission to ascertain whether the utility has complied with Accounting Instruction
39.
6. Should an impairment of the
'Contribution' account have occurred prior to the period covered by the transition
rules in this Accounting Instruction, the utility shall submit its proposed journal
entries to record such impairment accompanied by a complete explanation to the
Director of Accounting for acceptance and approval. The Director of Accounting shall
accept and approve the journal entries if an impairment has occurred and if the
entries reflect the level of impairment."
