Sec. 32.23  Nonregulated activities.

    (a) This section describes the accounting treatment of activities 
classified for accounting purposes as ``nonregulated.'' Preemptively 
deregulated activities and activities (other than incidental activities) 
never subject to regulation will be classified for accounting purposes 
as ``nonregulated.'' Activities that qualify for incidental treatment 
under the policies of this Commission will be classified for accounting 
purposes as regulated activities. Activities that have been deregulated 
by a state will be classified for

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accounting purposes as regulated activities. Activities that have been 
deregulated at the interstate level, but not preemptively deregulated, 
will be classified for accounting purposes as regulated activities until 
such time as this Commission decides otherwise. The treatment of 
nonregulated activities shall differ depending on the extent of the 
common or joint use of assets and resources in the provision of both 
regulated and nonregulated products and services.
    (b) When a nonregulated activity does not involve the joint or 
common use of assets and resources in the provision of both regulated 
and nonregulated products and services, carriers shall account for these 
activities on a separate set of books consistent with instructions set 
forth in Secs. 32.1406 and 32.7990. Transfers of assets, and sales of 
products and services between the regulated activity and a nonregulated 
activity for which a separate set of books is maintained, shall be 
accounted for in accordance with the rules presented in Sec. 32.27, 
Transactions with Affiliates. In the separate set of books, carriers may 
establish whatever detail they deem appropriate beyond what is necessary 
to provide this Commission with the information required in 
Secs. 32.1406 and 32.7990.
    (c) When a nonregulated activity does involve the common or joint 
use of assets and resources in the provision of regulated and 
nonregulated products and services, carriers shall account for these 
activities within accounts prescribed in this system for telephone 
company operations. Assets and expenses shall be subdivided in 
subsidiary records among amounts solely assignable to nonregulated 
activities, amounts solely assignable to regulated activities, and 
amounts related to assets and expenses incurred jointly or in common, 
which will be allocated between regulated and nonregulated activities. 
Carriers shall submit reports identifying regulated and nonregulated 
amounts in the manner and at the times prescribed by this Commission. 
Nonregulated revenue items not provided for elsewhere in this system of 
accounts and not qualifying for incidental treatment as provided in 
Sec. 32.4999(1), shall be recorded in separate subsidiary record 
categories of Account 5280, Nonregulated operating revenue. Amounts 
assigned or allocated to regulated products or services shall be subject 
to part 36 of this chapter.
[ 52 FR 6560 , Mar. 4, 1987, as amended at  53 FR 49322 , Dec. 7, 1988;  59 FR 46930 , Sept. 13, 1994]