Sec. 36.1  General.

    (a) This part contains an outline of separations procedures for 
telecommunications companies on the station-to-station basis. These 
procedures are applicable either to property costs, revenues, expenses, 
taxes, and reserves as recorded on the books of the company or to 
estimated amounts.
    (1) Where a value basis is used instead of book costs, the ``costs'' 
referred to are the ``values'' of the property derived from the 
valuation.
    (b) The separations procedures set forth in this part are designed 
primarily for the allocation of property costs, revenues, expenses, 
taxes and reserves between state and interstate jurisdictions. For 
separations, where required, of the state portion between exchange and 
toll or for separations of individual exchanges or special services, 
further analyses and studies may be required to adapt the procedures to 
such additional separations.
    (c) The fundamental basis on which separations are made is the use 
of telecommunications plant in each of the operations. The first step is 
the assignment of the cost of the plant to categories. The basis for 
making this assignment is the identification of the plant assignable to 
each category and the determination of the cost of the plant so 
identified. The second step is the apportionment of the cost of the 
plant in each category among the operations by direct assignment where 
possible, and all remaining costs are assigned by the application of 
appropriate use factors.
    (d) In assigning book costs to categories, the costs used for 
certain plant classes are average unit costs which equate to all book 
costs of a particular account or subaccount; for other plant classes, 
the costs used are those which either directly approximate book cost 
levels or which are equated to match total book costs at a given 
location.
    (e) The procedures outlined herein reflect ``short-cuts'' where 
practicable and where their application produces substantially the same 
separations results as would be obtained by the use of more detailed 
procedures, and they assume the use of records generally maintained by 
Telecommunications Companies.
    (f) The classification to accounts of telecommunications property, 
revenues, expenses, etc., set forth in this manual is that prescribed by 
the Federal Communications Commission's Uniform System of Accounts for 
Telecommunications Companies.
    (g) In the assignment of property costs to categories and in the 
apportionment of such costs among the operations, each amount so 
assigned and apportioned is identified as to the account classification 
in which the property is included. Thus, the separated results are 
identified by property accounts and apportionment bases are provided for 
those expenses which are separated on the basis of the apportionment of 
property costs. Similarly, amounts of revenues and expenses assigned 
each of the operations are identified as to account classification.
    (h) The separations procedures described in this part are not to be 
interpreted as indicating what property, revenues, expenses and taxes, 
or what items carried in the income, reserve and retained earnings 
accounts, should or should not be considered in any investigation or 
rate proceeding.

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