Section 14 14 CFR Ch. II (1–1–14 Edition)

77 Uncleared Credits. been cleared to the objective accounts to which applicable. (a) Record here credits to operating , which have not been cleared [ER–755, 37 FR 19726, Sept. 21, 1972, as amend- to the objective accounts to which ap- ed at 60 FR 66723, Dec. 26, 1995] plicable. 78 Direct Maintenance—Flight Equip- (b) Each air carrier shall credit, or ment. charge as appropriate, the objective ac- count prescribed for each expense ele- This classification is established for ment which may be involved in dis- purposes of control by the BTS and tribution of expenses between separate shall include all charges to operating reporting entities or nontransport divi- expenses for maintenance of flight sions of the air carrier. At the option equipment of all types and classes. of the air carrier, either the individual [ER–755, 37 FR 19726, Sept. 21, 1972, as amend- applicable objective accounts or this ed at 60 FR 66723, Dec. 26, 1995] may be credited with amounts capitalized, charged against incidental 79 Applied Burden Debit/Credit. services, or otherwise assigned to other (a) This classification is established than separate operating entities of the only for purposes of control by the BTS air carrier provided the aggregate cred- and reporting on Form 41 by air car- its to this account in each function do riers, and shall reflect all maintenance not, for any year, distort burden applied in accordance with the the individual objective accounts of provisions of section 24, schedule P–5 of the function to which related and all this system of accounts and reports. expense credits applicable to complete (b) This classification shall be sub- individual transactions are consist- divided as follows by all air carrier ently credited either to this account or groups: the individual objective accounts to which related. Each air carrier using 79.6 Applied Burden—Flight Equipment. this account shall establish such stand- ard practices as may be prescribed by 79.8 Applied Burden—General Ground the BTS or, in the absence of such ac- Property. tion by the Civil Aeronautics Board, [ER–755, 37 FR 19726, Sept. 21, 1972, as amend- such standard practices as will prevent ed by ER–979, 38 FR 10926, May 3, 1973; 60 FR credits to this account from signifi- 66723, Dec. 26, 1995] cantly distorting the individual objec- tive accounts of each function to which Section 14 Objective Classification— related. Nonoperating Income and Expense (c) This account shall not be credited with amounts applicable to objective 80 Interest Income. accounts of the Flying Operations, De- Included under account 89 Other Non- preciation, and Direct Maintenance operating Income and Expense—Net. functions. Credits applicable to such functions shall be carried to the indi- [ER–1401, 50 FR 245, Jan. 3, 1985] vidual objective accounts to which ap- plicable. 81 Interest on Long-term and Capital Leases. (d) This account shall be subdivided as follows by all air carrier groups: (a) Record here interest expense ap- plicable to long-term debt and capital- 77.8 Uncleared Interchange Expense Credits. ized leases. Record here credits to operating expenses, (b) This account shall be subdivided from operations performed for others under as follows by all air carrier groups: aircraft interchange agreements, which have not been cleared to the objective accounts to 81.1 Interest expense—long-term debt. which applicable. Record here interest on all classes of long- 77.9 Other Uncleared Expense Credits. term debt. This includes interest expense ap- plicable to all portions of long-term debt Record here credits to operating expenses, which are classified as either current (Ac- from other than operations under aircraft count 2000) or long-term (Account 2210) for interchange agreements, which have not classification purposes.

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81.2 Interest expense—capital leases. 85 Foreign exchange gains and losses. Record here for all capitalized leases, that Record here gains and losses from portion of each lease payment which rep- transactions involving currency trans- resents interest expense. lations resulting from nonroutine ab- [ER–1013, 42 FR 37516, July 21, 1977] normal changes in rates of foreign ex- change and gains or losses which arise 82 Other Interest. from translations of long-term debt (a) This account shall be subdivided principal and interest transactions. as follows by all air carrier groups: [Amdt. 241–58, 54 FR 5596, Feb. 6, 1989]

82.1 Interest Expense—Short-Term Debt. 86 Income from Nontransport Ven- Record here interest on all classes of short- tures. term debt. Included under account 89 Other Non- 83.1 Imputed Interest Capitalized—Credit. Operating Income and Expense—Net. Record here credits related to imputed in- [ER–980, 42 FR 38, Jan. 3, 1977] terest capitalized and recorded in ac- counts. 87 in Income of Investor Con- trolled Companies. 83.2 Imputed Interest Deferred—Debit. Included under account 89 Other Non- Record here debits related to imputed in- operating Income and Expense—Net. terest deferred in balance sheet account 2390, Other deferred credits. [ER–1401, 50 FR 245, Jan. 3, 1985]

83.3 Imputed Interest Deferred—Credit. 89 Other Nonoperating Income and Expense—Net. Record here periodic credits for imputed interest, cleared to this account as the (a) Record here all amount of such interest in the asset ac- of a nonoperating character which are counts is amortized. not otherwise provided for in this sec- tion. 83.4 Interest Capitalized—Credit. (b) This account shall be subdivided Record here interest which is capitalized as follows by all air carrier groups: and recorded in asset accounts. 80.0 Interest Income. 84.1 of discount and expense on (a) Record here interest income from all debt. sources. This account shall include as an in- Record here for all classes of debt the am- crease or reduction of interest received the ortizations of discount and expense on short- proportionate amortization of any discount term and long-term obligations. or premium on the purchase price of securi- ties of others held by the air carrier. 84.2 Amortization of premium on debt. (b) This account shall not include interest Record here for all classes of debt the am- on securities issued or assumed by the air ortizations of premium on short-term and carrier and subsequently reacquired. long-term obligations. 86.0 Income from Nontransport Ventures. (b) [Reserved] (a) Record here the gross and ex- [ER–1401, 50 FR 245, Jan. 3, 1985, as amended penses applicable to operations not reason- by Amdt. 241–58, 54 FR 5596, Feb. 6, 1989] ably considered as incidental to the commer- cial air transport services of the accounting 83 Capitalized Interest. entity; rents from nonoperating properties used by others; income or loss from non- Included under account 82 Other In- transport divisions; and other income or loss terest. from activities of the air carrier which are [ER–1401, 50 FR 245, Jan. 3, 1985] extraneous to the air transport and inci- dental services of the accounting entity. (b) This account shall include revenues and 84 Amortization of Debt Discount, Pre- expenses applicable to nonscheduled trans- mium and Expense. port services performed for the defense es- Included under account 82 Other In- tablishment when separate reports for such terest. services are required in accordance with sec- tion 21 ‘‘Introduction to System of Reports.’’ [ER–1401, 50 FR 245, Jan. 3, 1985] Where the foregoing transport services are

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not required to be separately reported, gross rities, and the transfer of in a trou- revenues from such services shall be included bled debt restructuring. in and loss account 07 Charter, or other appropriate account, and gross 88.7 Unapplied discounts. expenses shall be included in the appropriate Record here cash discounts on routine pur- functions. chases of materials, repair parts or supplies. Cash discounts on classes of assets included 87.0 Equity in Income of Investor Controlled in property and equipment accounts shall Companies. not be recorded in this account but shall be Record here the equity in the current earn- applied as a reduction of the of such ac- ings or losses of investor controlled compa- counts. nies. declared on the stock of such companies shall not be included in this ac- 88.9 Other miscellaneous nonoperating credits. count as income but shall be entered in bal- Record here all credits of a nonoperating ance sheet subaccount 1510.1 Investments in character not provided for otherwise, such as Investor Controlled Companies as a return royalties from patents, gains from reacquisi- on investment. tion and retirement or resale of debt securi- ties issued by the air carrier, and gains re- 88.1 Intercompany Transaction Adjustment— sulting from troubled debt restructurings. Credit. Record here all intercompany credits for 89.1 Intercompany Transaction Adjustment— any differences between amounts at which Debit. transactions between the air carrier and its Record here all intercompany debits for nontransport divisions or associated compa- any differences between amounts at which nies are initially recorded and are to be set- transactions between the air carrier and its tled. nontransport divisions or associated compa- nies are initially recorded and are to be set- 88.2 income. tled. Record here income from dividends de- 89.9 Other Miscellaneous Nonoperating Debits. clared on stocks of other than investor con- trolled companies. Dividends declared on Record here all debits of a nonoperating stock of investor controlled companies shall character not provided for otherwise, such as not be included in this account but shall be the following: entered in balance sheet subaccount 1510.1 (a) Fines or penalties imposes by govern- Investments in Investor Controlled Compa- mental authorities; nies. (b) associated with employment dis- crimination that include the following: 88.3 Net Unrealized Gain or Loss on (1) Fines or penalties paid by the carrier as Marketable Equity Securities. a result of a judicial or administrative de- Record here the net unrealized gain or loss cree; or the amount paid to the complainant on the of marketable equity secu- in settling or securing a consent decree; rities. (2) Back pay awards as a result of a judi- cial or administrative decree or a com- 88.4 Net Realized Gain or Loss on Marketable promise settlement regardless of admission Equity Securities. of guilt; (3) Attorneys’ fees or court costs awarded Record here the net realized gain or loss on to the complainant by a judicial or adminis- the valuation of marketable equity securi- trative decree or as a result of a compromise ties. settlement regardless of admission of guilt; 88.5 Capital gains and losses—operating (4) The fees of outside legal counsel or of property. experts retained in the unsuccessful defense of a discrimination suit or in securing a com- Record here gains or losses on retirements promise settlement or consent decree, unless of operating property and equipment, flight the amounts attributable to the discrimina- equipment expendable parts, or miscella- tion are not reasonably identifiable; or neous materials and supplies sold or other- (5) Any other expenses, such as employee wise retired in connection with a general re- salaries, resulting from employment prac- tirement program as opposed to incidental tices that were found to be discriminatory or performed as a service to others. that were the subject of a compromise settle- ment or consent decree where the amounts 88.6 Capital gains and losses—other. attributable to discrimination are reason- Record here gains or losses not required to ably identifiable. be reported in accounts 88.3, 88.4 and 88.5 (c) Amortization expense attributable to such as gains or losses on retirement of non- capital leases recorded in balance sheet Ac- operating property and equipment, invest- count 1795, Leased Property under Capital ments in other than marketable equity secu- Leases;

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(d) Costs related to property held for fu- corded by the air carrier during the pe- ture use; riod in which applied in settlement of (e) Donations for charitable, social or com- the taxes otherwise attributable to any munity welfare purposes; (f) Losses on reacquired and retired or re- member, or combination of members, sold debt securities of the air carrier; of the affiliated group. Any difference (g) Losses resulting from troubled debt between the income tax so recorded restructurings; and the amount at which settlement is (h) Losses on uncollectible nonoperating to be made shall be recorded in sub- receivables; or (i) to allowance for uncollectible account 88.1 Intercompany Transaction nonoperating receivables. Adjustment—Credit or in subaccount (Secs. 204, 404, 407, and 1002 of the Federal 89.1 Intercompany Transaction Adjust- Aviation Act of 1958, as amended, 72 Stat. ment—Debit, as is appropriate. 743, 760, 766, 788, (49 U.S.C. 1324, 1374, 1377, (c) This account shall be subdivided 1482)) as follows by all carrier groups: [ER–980, 42 FR 38, Jan. 3, 1977, as amended by ER–1013, 42 FR 37516, July 21, 1977; ER–1027, 91.1 Income Taxes Before Investment Tax 42 FR 60128, Nov. 25, 1977; ER–1076, 43 FR Credits. 46296, Oct. 6, 1978; ER–1401, 50 FR 245, Jan. 3, Record here accruals of income taxes based 1985; Amdt. 241–58, 54 FR 5596, Feb. 6, 1989] upon taxable income of the period.

Section 15 Objective Classification— 91.2 Investment Tax Credits Utilized. Income Taxes for Current Period Record here investment tax credits utilized 91 for Income Taxes. to reduce the accrued liability for income taxes. (a) Record here quarterly provisions for accruals of Federal, State, local, [Amdt. 241–58, 54 FR 5596, Feb. 6, 1989] and foreign taxes based upon net in- come, computed at the normal tax and 92 Provisions for Deferred Income surtax rates in effect during the cur- Taxes. rent accounting year. In general, this (a) Record here income tax debits and account shall reflect provisions within credits deferred in accordance with the each period for currently accruing tax provisions of balance sheet account liabilities as actually or constructively 2340 Deferred Income Taxes for all ma- computed on tax returns, and any sub- terial timing differences. sequent adjustments. This account (b) This account shall be subdivided shall include credits for refund claims as follows by all air carrier groups: arising from the carryback of losses in the year in which the loss occurs, cred- 92.1 Current Provisions for Deferred Taxes. its for the carry-forward of losses in the year to which the loss is carried, 92.2 Application of Taxes Deferred. and investment tax credits in the year 92.3 Adjustments of Deferred Taxes. in which each credit is utilized to re- duce the liability for income taxes. [ER–948, 41 FR 12296, Mar. 25, 1976] (b) Income taxes shall be allocated among the transport entities of the air 93 Investment Tax Credits Deferred carrier, its nontransport divisions, and and Amortized. members of an affiliated group. Under circumstances in which income taxes (a) Record here investment tax cred- are determined on a consolidated basis its of the current period which are by an air carrier and other members of transferred to balance sheet account an affiliated group, the income tax ex- 2345 Deferred Investment Tax Credits pense to be recorded by the air carrier in accordance with the provisions of shall be the same as would result if de- balance sheet account 2130 Accrued termined for the air carrier separately Taxes. This account shall also include for all time periods, except that the tax amounts for previously deferred invest- effect of carryback and carryforward ment tax credits amortized during the operating losses, investment tax cred- current period. its, or other tax credits generated by (b) This account shall be subdivided operations of the air carrier shall be re- as follows by all carrier groups:

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