Legal Resources Account Releases
Question:
What is the proper accounting for amounts received by companies subject to the FPC Uniform System of Accounts from suppliers of equipment and supplies, arising from claimed overcharges resulting from antitrust violations?
Answer:
Any
amounts received arising from claimed overcharges resulting from
alleged antitrust violations, including any interest factor, less
expenses not heretofore charged to operations attributable to
obtaining the refunds, whether such amounts are obtained through
negotiation or litigation, shall be applied in the year of
settlement to reduce the cost of plant or other accounts with which
the materials purchased were associated. If the amounts received are minor and/or applicable to
numerous items of properties, companies may with the approval of the
Chief Accountant of the Federal Power Commission credit the
depreciation reserve account or the current year's construction
account. If the amounts
received are payable on an installment basis over a period of years
and the payments include an interest factor attributable to the
delay in making settlement, the interest may be treated as other
income. Any amounts
received less related expenses should be reduced by any related tax
liability.
Arthur L. Litke
Chief Accountant