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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Federal Communications Commission Washington, D.C. 20554 In reply refer to: RAO LETTER 15 Released: March 5, 1990 Responsible Accounting Officers: Annual Report Form M--Interpretation of Certain Annual Report Form M Schedule Instructions We have received several requests for clarification of some of the instructions and line items on schedules in the Annual Report Form M. Since our responses to these questions would be helpful to all carriers who file an Annual Report Form M, we believe that a general distribution of our responses would be appropriate. This letter and the attachment are issued under Section 0.291 of the Commission's Rules. Applications for review under Section 1.115 of the Commission's Rules must be filed within 30 days from the date of public notice of this letter. If you have any questions, contact the Chief of the Accounting Systems Branch at (202) 418-0810. Sincerely, Kenneth P. Moran Chief, Accounting and Audits Division Common Carrier Bureau Attachment Annual Report Form M Questions and Answers on Certain Instructions and Schedules Schedule B - 3a, Investments in Affiliated Companies 1. Q. How should those affiliates who meet the "common control" criteria described in Section 32.9000 of the Commission's Rules be reported if no equity investment is recorded in Account 1401. Investments in Affiliated Companies? A. Affiliates who meet the "common control" criteria described in Section 32.9000 and for whom there is no investment amount recorded in Account 1401, Investment in Affiliated Companies, should be reported in separate columns on Schedule B-3b. Schedule B-3a, Investments in Affiliated Companies, is designed to disclose the carriers' investments in affiliated companies that are accounted for under the equity method (i.e., the investment amount is increased or decreased because of undistributed earnings or losses). The investment amounts are recorded in separate columns for each affiliate for whom an amount is recorded in Account 1401. The carriers should also report in the appropriate columns data required for affiliate activity in Account 1160, Temporary investments; Account 1180, Telecommunications accounts receivable; Account 1190, Other accounts receivable; Account 1200, Notes receivable; and Account 1210, Interest and dividends receivable. Schedule B-3b, Investments in Affiliated Companies--Cost Method and Nonaffiliated Companies 2. Q. Instruction 4 requires the carriers to report in column (j), nonaffiliated companies accounted for in Account 1402. Where do they report nonaffiliates in which they have no investment? A. Schedule B-3b is designed to disclose the investments in affiliated companies which are accounted for under the cost method and provide information on nonaffiliated companies. Respondents should report in columns (b) through (i) information on affiliated companies for whom an investment amount is recorded in Account 1401, Investment in Affiliated Companies, and accounted for under the cost method; and companies that meet the "common control" criteria for an affiliate under Section 32.9000. Information on nonaffiliates in which there is no equity ownership interest should be reported in column (j) of this schedule. Schedule B - 5a, Analysis of Telecommunications Plant in Service Retired 3. Q. Are both lines 2 and 6 necessary? A. No. Line 3300 is not necessary and will be deleted with the next revision of the Annual Report Form M. Schedule B - 5c, Bases of Charges for Depreciation 4. Q. Should Instruction 10 of this schedule be reworded to say "In column (h), report the amount of reserve deficiency amortized to Account 6561"? This will clarify that any other kind of amortization should be reported in column (g). A. No. Instruction 10 should not be reworded to limit column (h) to only amounts of reserve deficiency charged to Account 6561 during the year. There are two columns that pertain to charges to Account 6561, Depreciation expense- telecommunications plant in service--column (g). Expense Amount, and column (h), Amortization Amount. The carrier is required to report in column (g), the depreciation expense charged to Account 6561 and calculated by the method prescribed by the Commission for depreciation charges. No other charges are to be included in this column. For column (h), however, the carrier is required to report the amortization amount charged to Account 6561. These amounts in column (h) include amortization of a reserve deficiency and the results of any other special amortization of a plant asset. 5. Q. How should the amount in column (i) be determined? A. The average plant balance to be reported in column (i) shall equal the sum of monthly average plant balances for the year divided by twelve. Schedule B - 10, Long-Term Debt 6. Q. Should the word "unamortized" in Instruction 8 be changed to say "original" since this is how the yield rate is calculated? A. The term "unamortized" does not need to be changed. For the purposes of calculating the yield rate, we define the yield rate as the rate of interest which, when used to discount future cash flows results in total present value, equals the net proceeds received for the debt issue. This yield rate is computed at the time the debt is issued, and at the time of issuance, the terms "original" and "unamortized" are the same. Schedule I - 2, Special Expenses Attributable to Formal Regulatory Cases 7. Q. Is the reporting threshold of this schedule $100,000 as stated in Instruction 4 or should the threshold remain at the $10,000 limit as discussed in paragraph 99 in the Order? A. The reporting threshold of this schedule is $10,000. Schedule I-4, Pension Cost 8. Q. How should a carrier report its management and nonmanagement pension plans? A. The carriers shall identify and report each major pension plan on a separate page. Schedule I-8, Special Charges 9. Q. Should items under Caption 3 (construction projects) and Caption 4 (penalties and fines) that are less than $100,000 be reported? A. Yes, items that are less than $100,000 and come under Caption 3 or Caption 4 should be reported on the line entitled "Aggregate of All Other Items."