§  32.1220   Inventories.

   (a) This account shall include the cost of materials and supplies held
   in stock and inventories of goods held for resale or lease. The
   investment in inventories shall be maintained in the following
   subaccounts:

   1220.1 Material and supplies

   1220.2 Property held for sale or lease

   (b) These subaccounts shall not include items which are related to a
   nonregulated activity unless that activity involves joint or common use
   of assets and resources in the provision of regulated and nonregulated
   products and services.

   (c) 1220.1 Material and supplies. This subaccount shall include cost of
   material and supplies held in stock including plant supplies, motor
   vehicles supplies, tools, fuel, other supplies and material and
   articles of the company in process of manufacture for supply stock.
   (Note also § 32.2000(c)(2)(iii) of this subpart.)

   (d) Transportation charges and sales and use taxes, so far as
   practicable, shall be included as a part of the cost of the particular
   material to which they relate. Transportation and sales and use taxes
   which are not included as part of the cost of particular material shall
   be equitably apportioned among the detail accounts to which material is
   charged.

   (e) So far as practicable, cash and other discount on material shall be
   deducted in determining cost of the particular material to which they
   relate or credited to the account to which the material is charged.
   When such deduction is not practicable, discounts shall be equitably
   apportioned among the detail accounts to which material is charged.

   (f) Material recovered in connection with construction, maintenance or
   retirement of property shall be charged to this account as follows:

   (1) Reusable items that, when installed or in service, were retirement
   units shall be included in this account at the original cost, estimated
   if not known. (Note also § 32.2000(d)(3) of this subpart.)

   (2) Reusable minor items that, when installed or in service, were not
   retirement units shall be included in this account at current prices
   new.

   (3) The cost of repairing reusable material shall be charged to the
   appropriate account in the Plant Specific Operations Expense accounts.

   (4) Scrap and nonusable material included in this account shall be
   carried at the estimated amount which will be received therefor. The
   difference between the amounts realized for scrap and nonusable
   material sold and the amounts at which it is carried in this account,
   so far as practicable, shall be adjusted in the accounts credited when
   the material was taken up in this account.

   (g) Interest paid on material bills, the payments of which are delayed,
   shall be charged to Account 7500, Interest and related items.

   (h) Inventories of material and supplies shall be taken periodically or
   frequently enough for reporting purposes, as appropriate, in accordance
   with generally accepted accounting principles. The adjustments to this
   account shall be charged or credited to Account 6512, Provisioning
   expense.

   (i) 1220.2  Property held for sale or lease. This subaccount shall
   include the cost of all items purchased for resale or lease. The cost
   shall include applicable transportation charges, sales and use taxes,
   and cash and other purchase discounts. Inventory shortage and overage
   shall be charged and credited, respectively, to Account 5280,
   Nonregulated operating revenue.

   [ 52 FR 39534 , Oct. 22, 1987, as amended at  53 FR 49322 , Dec. 7, 1988;
    67 FR 5682 , Feb. 6, 2002]