N.M. Admin. Code § 17.12.720.16

Current through Register Vol. 35, No. 21, November 5, 2024

Section 17.12.720.16 - BALANCE SHEET ACCOUNTS

A. Utility Plant:

(1) 101 - Utility Plant in Service:

(a) This account shall include the original cost of utility plant, included in the plant accounts prescribed herein owned and used by the utility in its utility operations, and having an expectation of life in service of more than one (1) year from date of installation.

(b) The cost of additions to and betterments of property leased from others which are includable in this account shall be maintained in subdivisions separate and distinct from those relating to owned property. (See Utility Plant Instruction 5.)

(2) 104 - Utility Plant Leased to Others:

(a) This account shall include the original cost of utility plant owned by the utility but leased to others as operating units or systems where the lessee has exclusive possession.

(b) The property included in this account shall be classified according to the detailed accounts prescribed for utility plant in service, and this account shall be maintained in such detail as though the property were used by the owner in its utility operations.

(3) 105 - Property Held for Future Use:

(a) This account shall include the original cost of property owned and held for future use in utility service under a definite plan for such use. There shall be included herein property acquired but never used by the utility in utility service but held for such service in the future under a definite plan, and property previously used by the utility in utility service but retired from such service and held pending its reuse in the future, under a definite plan, in utility service.

(b) In the event that property recorded in this account shall no longer be needed or appropriate for future utility operations, the company shall notify the Commission of such condition and request approval to remove such property from this account.

(c) Gains or losses from the sale of land and land rights or other disposition of such property previously recorded in this account and not placed in utility service shall, unless otherwise authorized or required by the Commission, be recorded directly in account 422, Gains (Losses) from Disposition of Property. However, when determined to be significant by the Commission the gain or loss shall be transferred to account 253, Other Deferred Credits, or account 183, Other Deferred Debits. Such deferred amounts shall then be amortized to account 422, Gains (Losses) from Disposition of Property, unless otherwise authorized or required by the Commission.

(d) The property included in this account shall be classified according to the detailed accounts prescribed for utility plant in service, and the account shall be maintained in such detail as though the property were in service. Note: Materials and supplies, meters held in reserve, or normal spare capacity of plant in service shall not be included in this account.

(4) 106 - Utility Plant Purchased or Sold:

(a) This account shall be charged with the cost of utility plant acquired as an operating unit or system by purchase, merger, consolidation, liquidation, or otherwise, and shall be credited with the selling price of like property transferred to others pending the distribution to appropriate accounts in accordance with Utility Plant Instruction 4.

(b) Within six (6) months from the date of acquisition or transfer of property recorded herein there shall be filed with the Commission the proposed journal entries to clear from this account the amounts recorded herein.

(5) 107 - Construction Work in Progress: This account shall include the total of the balances of work orders for utility plant in process of construction but not ready for service at the date of the balance sheet.

(6) 110 - Accumulated Provision for Depreciation and Amortization of Utility Plant:

(a) This account shall be credited with the following:

(i) amounts charged to account 403, Depreciation Expense, and any other appropriate amortizations affecting utility plant matters;

(ii) amounts of depreciation applicable to utility properties acquired as operating units or systems (see Utility Plant Instruction 4);

(iii) amounts chargeable to account 182, Extraordinary Property Losses, when authorized by the Commission; and

(iv) amounts of depreciation applicable to utility plant donated to the utility;

(b) At the time of retirement of utility plant, this account shall be charged with the book cost of the property retired and the cost of removal, and shall be credited with the salvage value and any other amounts recovered, such as insurance.

(c) The utility is restricted in its use of the provisions for depreciation to the purposes set forth above. It shall not divert any portion of this account to retained earnings or make any use thereof without authorization by the Commission.

B. Other Property and Investments:

(1) 121 - Nonutility Property:

(a) This account shall include the book cost of land, structures, equipment, or other tangible or intangible property owned by the utility but not used in utility service and not property includable in account 105, Property Held for Future Use.

(b) This account shall be subdivided so as to show the amount of property used in operations which are nonutility in character but nevertheless constitute a distinct operating activity of the company (such as operation of a sewer department where such activity is not classed as a utility) and the amount of miscellaneous property not used in operations. The records in support of each subaccount shall be maintained so as to show an appropriate classification of the property.

(2) 124 - Other Investments:

(a) This account shall include the book cost of investments not accounted for elsewhere.

(b) The records shall be maintained in such manner as to show the amount of each investment and the investment advances to each person.

(3) 125 - Special Funds: This account shall include the amount of cash and book cost of investments which have been segregated in special funds for bond retirements, property additions and replacements, insurance, employees' pensions, savings, relief, hospital, and other purposes not provided for elsewhere. A separate account with appropriate title shall be kept for each fund.

C. Current and Accrued Assets: Current and accrued assets are cash; those assets which are readily convertible into cash or are held for current use in operations or construction; current claims against others, payment of which is reasonably assured; and amounts accruing to the utility which are subject to current settlement, except such items for which accounts other than those designated as current and accrued assets are provided. There shall not be included in the group of accounts any accounts designated as current and accrued assets of any item, the amount or collectibility of which is not reasonably assured unless an adequate provision for possible loss has been provided. Items of current character but of doubtful value may be written down and for record purposes carried in these accounts at nominal value.

(1) 131 - Cash and Working Funds: This account shall include the amount of cash on hand and in banks and cash advanced to officers, agents, employees, and others, as petty cash or working funds. Special cash deposits for payment of interest, dividends, or other special purposes shall be included in this account in separate subdivisions which shall specify the purpose for which each such special deposit is made. Note: Special Deposits for more than one (1) year which are not offset by current liabilities shall not be charged to this account but to account 125, Special Funds.

(2) 132 - Temporary Cash Investments:

(a) This account shall include the book cost of investments, such as demand and time loans, bankers' acceptances, United States Treasury Certificates, marketable securities, certificates of deposit, and other similar investments acquired for the purpose of temporarily investing cash.

(b) This account shall be so maintained as to show separately temporary cash investments in securities of associated companies and of others. Records shall be kept of any pledged investments.

(3) 142 - Customer Accounts Receivable:

(a) This account shall include amounts due from customers for utility service and for merchandising, jobbing, and contract work. This account shall not include amounts due from associated companies.

(b) This account shall be maintained so as to show separately the amounts due from merchandising, jobbing, and contract work.

(4) 143 - Other Accounts Receivable:

(a) This account shall include amounts due the utility upon or from notes receivable, or other debt owed to the utility, and open accounts other than amounts due from associated companies and from customers for utility services and merchandising, jobbing, and contract work.

(b) This account shall be maintained so as to show separately amounts due on subscriptions to capital stock and from officers and employees, but the account shall not include amounts advanced to officers or others an working funds. (See account 131, Cash and Working Funds.)

(5) 144 - Accumulated Provision for Uncollectible Accounts:

(a) This account shall be credited with amounts provided for losses on accounts receivable which may become uncollectible and also with collections on accounts previously charged hereto.

(b) This account shall be subdivided to show the provision applicable to the following classes of accounts receivable: Utility Customers; Merchandising; Jobbing and Contract Work; Officers and Employees; Other.

(i) Note A: Accretions to this account shall not be made in excess of a reasonable provision against losses of the character provided for.

(ii) Note B: If provisions for uncollectible notes receivable or for uncollectible receivables from associated companies are necessary, separate subaccounts therefor shall be established under the account in which the receivable is carried.

(6) 146 - Accounts Receivable from Associated Companies: These accounts shall include notes and drafts upon which associated companies are liable and which mature and are expected to be paid in full not later than one (1) year from date of issue, together with any interest thereon and debit balances subject to current settlement in open accounts with associated companies. Items which do not bear a specific due date but which have been carried for more than twelve (12) months and items which are not paid within twelve (12) months from due date shall be transferred to account 124, Other Investments. Note: On the balance sheet accounts receivable from an associated company may be set off against accounts payable to the same company.

(7) 150 - Materials and Supplies:

(a) This account shall include the cost of fuel on hand and unapplied materials (except meters). It shall include also the book cost of materials recovered in connection with construction, maintenance, or the retirement of property, such materials being credited to construction, maintenance, or accumulated depreciation provision, respectively, and included herein as follows.

(i) Reusable materials consisting of large individual items shall be included in this account at original cost, estimated if not known. The cost of repairing such items shall be charged to the maintenance account appropriate for the previous use.

(ii) Reusable materials consisting of relatively small items, the identity of which (from the date of original installation to the final abandonment or sale thereof) cannot be ascertained without undue refinement in accounting, shall be included in this account at current prices new for such items. The cost of repairing such items shall be charged to the appropriate expense account as indicated by previous use.

(iii) Scrap and nonusable materials included in this account shall be carried at the estimated net amount realized therefrom. The difference between the amounts realized for scrap and nonusable materials sold and the net amount at which the materials were carried in this account as far as practicable shall be adjusted to the accounts credited when the materials were charged to this account.

(b) Materials and supplies issued shall be credited hereto and charged to the appropriate construction, operating expense, or other account on the basis of a unit price determined by the use of cumulative average, first-in-first-out, or such other method of inventory accounting as conforms with accepted accounting standards consistently applied.

(c) Inventories of materials, supplies, fuel, etc., shall be taken at least annually and the necessary adjustments shall be made to bring this account into agreement with the actual inventories. In effecting the adjustments, large differences which can be assigned to important classes of materials shall be equitably adjusted among the accounts to which such classes of materials have been charged since the previous inventory. Other differences shall be equitably apportioned among the accounts to which materials have been charged.

(d) Items

(i) Invoice price of materials less cash or other discounts.

(ii) Transportation charges when practicable to include as part of the cost of particular materials to which they relate.

(iii) Custom duties and excise taxes.

(iv) Costs of inspection and special tests prior to acceptance.

(v) Insurance and other directly assignable charges.

(8) 166 - Prepayments:

(a) This account shall include the amount of rents, taxes, insurance, interest, and like disbursements made in advance of the period to which they apply. As the periods covered by such prepayments expire, credit this account and charge the proper operating expense or other account with the amount applicable to the period.

(b) This account shall be kept or supported in such manner as to disclose the amount of each class of prepayments.

(9) 170 - Other Current and Accrued Assets: This account shall include the book cost of all other current and accrued assets, appropriately designated and supported so as to show the nature of each asset included herein.

D. Equity Capital:

(1) 201 Common Stock:

(2) 215 - Accumulated Retained Earnings (or Losses): This account shall include the amount of all retained earnings, including those appropriated or set aside for specific purposes. Separate subaccounts shall be maintained under such titles as will designate the purpose for which each appropriation was made.

(3) 218 - Noncorporate Proprietorship: This account shall include the investment in an unincorporated utility by the proprietor thereof, and shall be charged with all withdrawals from the business by its proprietor. At the end of each calendar year, the net income for the year, as developed in the income account, shall be transferred to this account. (See optional accounting procedure provided in Note C, hereunder.)

(a) Note A: Amounts payable to the proprietor as just and reasonable compensation for services performed shall not be charged to this account but to appropriate operating expense or other accounts.

(b) Note B: When the utility is owned by a partnership, a separate account shall be kept to show the net equity of each member therein and the transactions affecting the interest of each such partner.

(c) Note C: This account may be restricted to the amount considered by the proprietor to be the permanent investment in the business, subject to change only by additional investment by the proprietor or the withdrawal of portions thereof not representing net income. When this option is taken, the retained earnings accounts shall be maintained and entries thereto shall be made in accordance with the texts thereof.

E. Long Term Debt:

(1) 223 - Advances from Associated Companies:

(a) This account shall include the face value of notes payable to associated companies and the amount of open book accounts representing advances from associated companies. It does not include notes and open accounts representing indebtedness subject to current settlement which are includable in account 233, Notes Payable to Associated Companies, or account 234, Accounts Payable to Associated Companies.

(b) The records supporting the entries to this account shall be so kept that the utility can furnish complete information concerning each note and open account.

(2) 224 - Other Long Term Debt:

(a) This account shall include, until maturity, all long term debt. This covers such items as notes, loans, receivers certificates, real estate mortgages executed or assumed, assessments for public improvements, notes and unsecured certificates of indebtedness now owned by associated companies, receipts outstanding for long term debt, and other obligations maturing more than eighteen (18) months from date of issue or assumption.

(b) Records shall be maintained to show separately for each item all details as to date of obligation, date of maturity, interest dates and rates, security for the obligation, etc.

F. Current and Accrued Liabilities: Current and accrued liabilities are those obligations which have either matured or which become due within one (1) year from the date thereof; except, however, bonds, receivers' certificates, and similar obligations which shall be classified as long term debt until date of maturity; accrued taxes, such as income taxes, which shall be classified as accrued liabilities even though payable more than one (1) year from date; compensation awards, which shall be classified as current liabilities regardless of date due; and minor amounts payable in installments which may be classified as current liabilities. If a liability is due more than one (1) year from date of issuance or assumption by the utility, and it shall be credited to a long term debt of issuance or assumption by the utility, it shall be credited to a long term debt account appropriate for the transaction, except, however, the current liabilities previously mentioned.

(1) 231 - Notes Payable: This account shall include the face value of all notes, drafts, acceptances, or other similar evidences of indebtedness payable on demand, or within a time not exceeding one (1) year from date of issue, to other than associated companies.

(2) 232 - Accounts Payable: This account shall include all amounts payable by the utility within one (1) year which are not provided for in other accounts.

(3) 233 - Notes Payable to Associated Companies:

(4) 234 - Accounts Payable to Associated Companies: These accounts shall include amounts owed to associated companies on notes, drafts, acceptances, or other similar evidences of indebtedness, and open accounts payable on demand for not more than one (1) year from date of issuance or creation. Note: Exclude from these accounts notes and accounts which are includable in account 223, Advances from Associated Companies.

(5) 235 - Customer Deposits: This account shall include all amounts deposited with the utility by customers as security for the payment of bills.

(6) 236 - Taxes Accrued:

(a) This account shall be credited with the amount of taxes accrued during the accounting period, corresponding debits being made to the appropriate accounts for tax charges. Such credits may be based upon estimates, but from time to time during the year as the facts become known the amount of the periodic credits shall be adjusted so as to include as nearly as can be determined in each year the taxes applicable thereto. Any amount representing a prepayment of taxes applicable to the period subsequent to the date of the balance sheet shall be shown under account 166, Prepayments.

(b) If accruals for taxes are found to be insufficient or excessive, correction therefor shall be made through current tax accruals. However, if such corrections are so large as to seriously distort current expenses, see General Instruction 9.

(c) Accruals for taxes shall be based upon the net amount payable after credit for any discounts and shall not include any amounts for interest on tax deficiencies or refunds. Interest received on refunds shall be credited to account 419. Interest and Dividend Income and interest paid on deficiencies shall be charged to account 431, Other Interest Expense.

(d) The records supporting the entries to this account shall be kept so as to show for each class of taxes the amount accrued, the basis for the accrual, the accounts to which charged, and the amount of tax paid.

(7) 237 - Interest Accrued: This account shall include the amount of interest accrued but not matured on all liabilities of the utility, not including, however, interest which is added to the principal of the debt on which incurred. Supporting records shall be maintained so as to show the amount of interest accrued on each obligation.

(8) 238 - Other Current and Accrued Liabilities: This account shall include the amount of all other current and accrued liabilities not provided for elsewhere appropriately designated and supported so as to show the nature of each liability: Items:

(a) Dividends declared but not paid.

(b) Matured long term debt.

(c) Matured interest.

(d) Taxes collected through payroll deductions or otherwise, including sewage charges collected by the utility, pending transmittal to the proper taxing authority.

G. Deferred Credits:

(1) 252 - Advances for Construction: This account shall include advances by, or on behalf of, customers for construction which are to be refunded either wholly or in part. When a person is refunded the entire amount to which he is entitled according to the agreement or rule under which the advance was made, the balance, if any, remaining in this account shall be credited to 271, Contributions in Aid of Construction.

(2) 253 - Other Deferred Credits: This account shall include gains on disposition of property, net of income taxes deferred by authorization of the Commission, advance billings and receipts, and other deferred credit items not provided for elsewhere, including amounts which cannot be entirely cleared or disposed of until additional information has been received.

(3) 255 - Accumulated Deferred investment Tax Credits:

(a) Prior to any use of this account the utility must file with the Commission, for the purpose of obtaining authorization, a copy of its proposed plan of accounting for deferred investment tax credits. The utility shall not use these accounts unless such use has been authorized by the Commission. This account shall be credited and account 412, Investment Tax Credits, debited with all investment tax credits deferred by companies authorized to use deferral accounting rather than recognizing in the income statement the total benefits of the investment tax credit as realized. There can be neither changes in accounting method for utility operations nor transfers from this account, except as authorized herein or as may otherwise be authorized by the Commission. (See account 412.)

(b) This account shall be debited and account 412 credited with a proportionate amount determined in relation to the average useful life of utility property to which the tax credits relate or such lesser period of time as may be adopted and consistently followed by the company.

(c) Subdivisions of this account by department shall be maintained for deferred investment tax credits that are related to nonutility or other operations. Contraentries affecting such account subdivisions shall be appropriately recorded. Use of deferral or nondeferral accounting procedures adopted for nonutility or other operations are to be followed on a consistent basis.

(d) Separate records for each utility and nonutility operation shall be maintained identifying the properties giving rise to the investment tax credits for each year with the weighted average service life of such properties and any unused balances of such credits. Such records are not necessary unless the tax credits are deferred.

H. Operating Reserves: 265 - Miscellaneous Operating Reserves:

(1) This account shall include all operating reserves maintained by the utility.

(2) This account shall be maintained in such manner as to show the amount of each separate reserve and the nature and amounts of the debits and credits thereto.

(3) Note: This account includes only such reserves as may be created for operating purposes and does not include any reservations of income, the credits for which should be carried in account 215, Appropriated Retained Earnings.

I. 271 - Contributions in Aid of Construction:

(1) This account shall include donations or contributions in cash, services, or property from states, municipalities, or other governmental agencies, individuals, and others for construction purposes.

(2) The credits to this account shall not be transferred to any other account without the approval of the Commission.

(3) The records supporting the entries to this account shall be so kept that the utility can furnish information as to the purpose of each donation; the conditions, if any, upon which it was made; the amount of donations from (a) states, (b) municipalities, (c) customers, and (d) others; and the amount applicable to each utility department.

(4) Note: There shall not be included in this account advances for construction which are ultimately to be repaid wholly or in part. (See account 252, Advances for Construction.)

J. 283 - Accumulated Deferred Income Taxes:

(1) This account shall be credited and account 410, Provision for Deferred Income Taxes, shall be debited with an amount equal to that by which taxes on income payable for the year are lower because of the current use of deductions, including accelerated amortization or liberalized depreciation in the computation of income taxes, which deductions for general accounting purposes will not be fully reflected in the utility's determination of annual net income until subsequent years.

(2) Records with respect to entries to this account, as described above, and the account balance shall be so maintained as to show the factors of calculation with respect to each annual amount of the item or class of items other than accelerated amortization or liberalized depreciation, for which tax deferral accounting by the utility is authorized by the Commission.

N.M. Admin. Code § 17.12.720.16

Recompiled 12/30/01