§ 65.820   Included items.

   (a)  Telecommunications  plant.  The  interstate portion of all assets
   summarized in Account 2001 (Telecommunications Plant in Service) and Account
   2002 (Property Held for Future Use), net of accumulated depreciation and
   amortization,   and   Account  2003  (Telecommunications  Plant  Under
   Construction),  and, to the extent such inclusions are allowed by this
   Commission, Account 2005 (Telecommunications Plant Adjustment). Any interest
   cost for funds used during construction capitalized on assets recorded in
   these accounts shall be computed in accordance with the procedures in Sec.
   32.2000(c)(2)(x) of this chapter.

   (b) Material and supplies. The interstate portion of assets summarized in
   Account 1220.1 (Material and Supplies).

   (c) Noncurrent assets. The interstate portion of Class B Rural Telephone
   Bank stock contained in Account 1410 and the interstate portion of assets
   summarized  in Account 1410 (Other Noncurrent Assets) and Account 1438
   (Deferred Maintenance, Retirements and Deferred Charges), only to the extent
   that they have been specifically approved by this Commission for inclusion
   (Note: The interstate portion of assets summarized in Account 1410 should
   not include any amounts related to investments, sinking funds or unamortized
   debt issuance expense). Except as noted above, no amounts from accounts 1406
   through 1500 shall be included.

   (d) Cash working capital. The average amount of investor-supplied capital
   needed to provide funds for a carrier's day-to-day interstate operations.
   Class A carriers may calculate a cash working capital allowance either by
   performing a lead-lag study of interstate revenue and expense items or by
   using  the formula set forth in paragraph (e) of this section. Class B
   carriers, in lieu of performing a lead-lag study or using the formula in
   paragraph  (e) of this section, may calculate the cash working capital
   allowance using a standard allowance which will be established annually by
   the Chief, Wireline Competition Bureau. When either the lead-lag study or
   formula  method  is used to calculate cash working capital, the amount
   calculated under the study or formula may be increased by minimum bank
   balances and working cash advances to determine the cash working capital
   allowance. Once a carrier has selected a method of determining its cash
   working capital allowance, it shall not change to an optional method from
   one year to the next without Commission approval.

   (e)  In lieu of a full lead-lag study, carriers may calculate the cash
   working capital allowance using the following formula.

   (1) Compute the weighted average revenue lag days as follows:

   (i) Multiply the average revenue lag days for interstate revenues billed in
   arrears by the percentage of interstate revenues billed in arrears.

   (ii) Multiply the average revenue lag days for interstate revenues billed in
   advance by the percentage of interstate revenues billed in advance. (Note: a
   revenue lead should be shown as a negative lag.)

   (iii) Add the results of paragraphs (e)(1) (i) and (ii) of this section to
   determine the weighted average revenue lag days.

   (2) Compute the weighted average expense lag days as follows:

   (i)  Multiply the average lag days for interstate expenses (i.e., cash
   operating expenses plus interest) paid in arrears by the percentage of
   interstate expenses paid in arrears.

   (ii) Multiply the average lag days for interstate expenses paid in advance
   by the percentage of interstate expenses paid in advance. (Note: an expense
   lead should be shown as a negative lag.)

   (iii) Add the results of paragraphs (e)(2) (i) and (ii) of this section to
   determine the weighted average expense lag days.

   (3) Compute the weighted net lag days by deducting the weighted average
   expense lag days from the weighted average revenue lag days.

   (4) Compute the percentage of a year represented by the weighted net lag
   days by dividing the days computed in paragraph (e)(3) of this section by
   365 days.

   (5) Compute the cash working capital allowance by multiplying the interstate
   cash operating expenses (i.e., operating expenses minus depreciation and
   amortization) plus interest by the percentage computed in paragraph (e)(4)
   of this section.

   [ 54 FR 9048 , Mar. 3, 1989, as amended at  60 FR 12139 , Mar. 6, 1995;  67 FR 5703 , Feb. 6, 2002;  67 FR 13229 , Mar. 21, 2002]

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