(b) "Applicable taxes” means all federal, state, territorial and foreign taxes paid by or refunded to the carrier with respect to each gain or loss upon retirement of flight equipment, including capital gains taxes, deductions for capital losses, transfer taxes and documentary taxes. (c) "Date of sale or other disposition" means the date on which the transfer or disposition of the flight equipment is final and complete and nothing remains to be done by the air carrier selling or disposing of the flight equipment to entitle it to payment of the consideration or value, regardless of the period over which actual payments are to be made. (d) "Flight equipment" means airframes, aircraft engines, aircraft propellers, aircraft communications and navigational equipment, miscellaneous flight equipment, improvements to leased flight equipment and flight equipment rotable parts and assemblies, within the meaning of Part 241 (Accounts 1601 through 1608 and 1701 through 1708) of this subchapter. (e) "Gain" means the amount by which the total proceeds (less applicable expenses and taxes) realized from the sale or other disposition of one or more units of flight equipment in a single transaction exceeds the total depreciated cost of the units of flight equipment sold or disposed of in that transaction: Provided, however, That no gain shall be considered as realized in the case of an exchange of like equipment or in the case of a recovery from the carrier's insurer on account of the loss or destruction of an aircraft, where the insurer exercises an option under the insurance policy to replace such aircraft in kind. (f) "Investment in flight equipment" means the acquisition of flight equipment in any manner including purchase, exchange, construction, additions and improvements to flight equipment, or payment on account thereof. (g) "Re-equipment fund” means cash or its equivalent and other liquid assets such as an obligation of the purchaser, a special bank deposit or investment in securities, segregated from the general assets of the air carrier and held for the exclusive purposes of purchasing or constructing flight equipment or retiring debt contracted for the purchase or construction of flight equipment. (h) "Sale or other disposition" means the retirement of flight equipment by any means, including sale, exchange, 66-031-67-10 abandonment, demolition, or other disposal of flight equipment. § 235.2 Eligibility for benefits of section 406(d). Air carriers seeking to obtain the benefits of section 406(d) of the Federal Aviation Act of 1958 with respect to all or part of any gain derived from the sale or other disposition of flight equipment, shall comply with the statutory requirements in the manner provided in this part. 139 § 235.3 Reinvestment of gains. The gain from the sale or other disposition of flight equipment shall be applied to investment in flight equipment or to the retirement of debt contracted for investment in flight equipment, or shall be deposited for such purposes in a re-equipment fund not later than 60 days after the date of such sale or other disposition and before the date on which the air carrier files the schedules required by § 235.4. The gain may not be invested in flight equipment delivered to the carrier prior to April 6, 1956. A gain realized prior to the adoption of this part shall be applied or deposited in the manner described herein not later than 60 days after the adoption of the part. § 235.4 Notice to Board. Form 41 Schedule B-8 (a) shall be filed by the air carrier, in triplicate, with the Board not later than 60 days after the date of the sale or other disposition of flight equipment from which the air carrier derived a gain. Form 41 Schedule B-7(a) shall also be filed, in triplicate, within the same period if the carrier has applied the gain for investment in flight equipment or to the retirement of debt contracted for investment in flight equipment. If the date of the sale or other disposition was on or after April 6, 1956, but prior to the date of the adoption of this part, the appropriate schedule(s) shall be filed not later than 60 days after the adoption of this part. § 235.5 Re-equipment fund. (a) Any gains deposited in a re-equipment fund shall be applied to investment in flight equipment, or to the retirement of debt contracted for investment in flight equipment, not later than two years after the date of the sale or other disposition of flight equipment from which the air carrier derived the gain, unless the Board, for good cause shown, grants an extension of such time limitation. Gain invested in flight equipment delivered to the carrier prior to April 6, 1956, is not eligible for the benefits of section 406(d). (b) Not later than 10 days after any change in the assets making up the reequipment fund, the air carrier shall report such change in an amended Schedule B-8(a). Not later than 60 days after the application of the gain deposited in a re-equipment fund, the air carrier shall file Form 41 Schedule B-7(a). NOTE: The reporting requirements contained herein have been approved by the Bureau of the Budget in accordance with the Federal Reports Act of 1942. or (a) The first sentence of section 407 (e) of the Federal Aviation Act of 1958 is construed as follows: "The Board itself, or through duly accredited special agents or auditors, shall at all times have access to all lands, buildings, records and memoranda, including all documents, papers, and correspondence, now hereafter existing, and kept or required to be kept by air carriers; and any special agents or auditors employed for the purpose shall have authority, when so directed by the Board, to inspect and examine any and all such lands, buildings, equipment, accounts, records, and memoranda and to make such notes and copies thereof as he deems appropriate." (b) The terms "special agent" and "auditor" are respectively construed to mean (1) any employee of the Office of Compliance, any employee of the Bureau of Safety, and any other employee of the Board specifically designated by it or by the Chief, Office of Administration; and (2) any employee of the Field Audits Division, Office of Carrier Accounts and Statistics. (c) The issuance in the form set forth below of an identification card and credentials to any such employee shall be construed to be an order and direction of the Board to such individual to The holder hereof is authorized to investigate violations of the FAA, as amended, collect evidence in cases in which the economic regulatory authority of the Civil Aeronautics Board is or may be involved and perform other duties imposed upon him by law. Section 407 (e) of the Federal Aviation Act of 1958, as amended, together with Part 240 of the Regulations of the Civil Aeronautics Board, provides in part that the Board, through its duly accredited special agents or auditors, shall at all times have access to, and may inspect and examine, all lands, buildings and equipment of any air carrier and all accounts, records, and memoranda, including all documents, papers, and correspondence, and make copies thereof. The issuance of these credentials to the holder hereof constitutes an order and direction on the part of the Civil Aeronautics Board to such individual to carry out these duties as aforesaid and as more fully described in Part 240 of the Board's Economic Regulations. Failure to honor these credentials will result in penalties as provided by law. UNITED STATES OF AMERICA (d) Any identification card and credentials heretofore issued to any such 2-10 2-11 Any air carrier, upon the demand of a pecial agent or auditor of the Board and pon the presentation of the identificaon card and credentials issued to him in ccordance with this part, shall forthith permit such special agent or auditor > inspect and examine all lands, build1gs, and equipment of the carrier and ll accounts, records, and memoranda, ncluding all documents, papers, and orrespondence now or hereafter exist1g, and kept or required to be kept by he carrier and shall permit such special gent or auditor to make such notes and opies thereof as he deems appropriate. ER-170, 17 F.R. 5609, June 21, 1952] 2-12 2-13 2-14 2-15 Conversion to This System of Accounts and Reports. General Accounting Policies. Bases of Allocation Between Entities. Distribution of Revenues and Expenses Within Entities. Transactions in Foreign Currencies. Accounting Period. Liability Accruals. Federa Income Tax Accruals. Delayed Items. Unaudited Items. Improvements, Additions and Better ments. Capitalization of interest. Accounting for Transactions in Gross Amounts. Acquisition and Valuation of Assets. Establishment of Reserves. Depreciation and Amortization. Contingent Assets and Contingent 2-16 Notes to Financial Statements. Chart of Balance Sheet Accounts. Balance Sheet Account Groupings. Investments and Special Funds. Property and Equipment Depreciation 3 4 5 5-1 5-2 5-3 5-4 5-5 Deferred Charges. 5-6 Current Liabilities. 5-7 Noncurrent Liabilities. and Overhaul. Sec. 25 26 27 31 32 83 Traffic and Capacity Elements. 34 Profit and Loss Elements. 35 Traffic and Capacity Elements. 36 General Corporate Elements. AUTHORITY: The provisions of this Part 241 issued under secs. 204, 407, 72 Stat. 743; 49 U.S.C. 1324, 1377, unless otherwise noted. SOURCE: The provisions of this Part 241 contained in ER-327, 26 F.R. 4222, May 16, 1961, unless otherwise noted. Section 01-Authority Under Which Accounting and Reporting Rules and Regulations are Prescribed and Administered This Uniform Systems of Accounts and Reports for Certificated Air Carriers is issued, prescribed and administered under the following provisions of the Federal Aviation Act of 1958, as amended (72 Stat. 731, 49 U.S.C. 1301): GENERAL POWERS SEC. 204. (a) The Board is empowered to perform such acts, to conduct such investigations, to issue and amend such orders, and to make and amend such general or special rules, regulations, and procedure, pursuant to and consistent with the provisions of this Act, as it shall deem necessary to carry out the provisions of, and to exercise and perform its powers and duties under, this Act. FILING OF REPORTS SEC. 407. (a) The Board is empowered to require annual, monthly, periodical, and special reports from any air carrier; to prescribe the manner and form in which such reports shall be made; and to require from any air carrier specific answers to all questions upon which the Board may deem information to be necessary. Such reports shall be under oath whenever the Board so requires. The Board may also require any air carrier to file with it a true copy of each or any contract, agreement, understanding, or arrangement, between such air carrier and any other carrier or person, in relation to any traffic affected by the provisions of this Act. DISCLOSURE OF STOCK OWNERSHIP SEC. 407. (b) Each air carrier shall submit annually, and at such other times as the Board shall require, a list showing the names of each of its stockholders or members holding more than 5 per centum of the entire capital stock or capital, as the case may be of such air carrier, together with the name of any person for whose account, if other than the holder, such stock is held; and a report setting forth a description of the shares of stock, or other interest, held by such air carrier, or for its account, in persons other than itself. FORM OF ACCOUNTS SEC. 407. (d) The Board shall prescribe the forms of any and all accounts, records, and memoranda to be kept by air carriers, including the accounts, records, and memoranda of the movement of traffic, as well as of the receipts and expenditures of money, and the length of time such accounts, records, and memoranda shall be preserved; and it shall be unlawful for air carriers to keep any accounts, records, or memoranda other than those prescribed or approved by the Board: Provided, That any air carrier may keep additional accounts, records, or memoranda if they do not impair the integrity of the accounts, records, or memoranda prescribed or approved by the Board and do not constitute an undue financial burden on such air carrier. INSPECTION OF ACCOUNTS AND PROPERTY SEC. 407. (e) The Board shall at all times have access to all lands, buildings, and equipment of any carrier and to all accounts, records, and memoranda, including all documents, papers, and correspondence, now or hereafter existing, and kept or required to be kept by air carriers; and it may employ special agents or auditors, who shall have authority under the orders of the Board to inspect and examine any and all such lands, buildings, equipment, accounts, records, and memoranda. The provisions of this section shall apply, to the extent found by the Board to be reasonably necessary for the administration of this Act, to persons having control over any air carrier, or affiliated with any air carrier within the meaning of section 5(8) of the Interstate Commerce Act, as amended. CLASSIFICATION SEC. 416. (a) The Board may from time to time establish such just and reasonable classifications or groups of air carriers for the purposes of this title as the nature of the services performed by such air carriers shall require; and such just and reasonable rules and regulations, pursuant to and consistent with the provisions of this title, to be ob served by each such class or group, as the Board finds necessary in the public interest. SAFETY, ECONOMIC AND POSTAL OFFENSES SEC. 901. (a) (1) Any person who violates (A) any provision of title III, IV, V, VI, VII, or XII of this Act, or any rule, regulation, or order issued thereunder, or under section 1002(1), or any term, condition limitation of any permit or certificate issued under title IV, or (B) any rule or regula tion issued by the Postmaster General un der this Act, shall be subject to a civil penalty of not to exceed $1,000 for each such violation. If such violation is a continuing ɔne, each day of such violation shall contitute a separate offense: Provided, That his subsection shall not apply to members of the Armed Forces of the United States, or those civilian employees of the Departnent of Defense who are subject to the rovisions of the Uniform Code of Military Justice, while engaged in the performance of their official duties; and the appropriate nilitary authorities shall be responsible for aking any necessary disciplinary action with espect thereto and for making to the Adninistrator or Board, as appropriate, a timely eport of any such action taken. (2) Any such civil penalty may be comromised by the Administrator in the case f violations of titles III, V, VI, or XII, or ny rule, regulation, or order issued thereinder, or by the Board in the case of violaions of titles IV or VII, or any rule, regulaion or order issued thereunder, or under ection 1002(i), or any term, condition, or imitation of any permit or certificate 18ued under title IV, or by the Postmaster General in the case of regulations issued by him. The amount of such penalty, when inally determined, or the amount agreed ipon in compromise, may be deducted from ny sums owing by the United States to he person charged. FAILURE TO FILE REPORTS; FALSIFICATION OF SEC. 902. (e) Any air carrier, or any officer, gent, employee, or representative thereof, who shall, knowingly and willfully, fail or efuse to make a report to the Board or Administrator as required by this Act, or to keep or preserve accounts, records, and nemoranda in the form and manner prescribed or approved by the Board or Administrator, or shall, knowingly and willfully, falsify, mutilate, or alter any such report, account, record, or memorandum, or shall knowingly and willfully file any false report, account, record, or memorandum, shall be deemed guilty of a misdemeanor and, upon conviction thereof, be subject for each offense to a fine of not less than $100 and not more than $5,000. REFUSAL TO TESTIFY SEC. 902. (g) Any person who shall neglect or refuse to attend and testify, or to answer any lawful inquiry, or to produce books, papers, or documents, if in his power to do So, in obedience to the subpena or lawful requirement of the Board or Administrator, shall be guilty of a misdemeanor and, upon conviction thereof, shall be subject to a fine of not less than $100 nor more than $5,000, or imprisonment for not more than one year, or both. FILING OF COMPLAINTS AUTHORIZED SEC. 1002. (a) Any person may file with the Administrator or the Board, as to matters within their respective jurisdictions, a complaint in writing with respect to anything done or omitted to be done by any person in contravention of any provisions of this Act, or of any requirement established pursuant thereto. If the person complained against shall not satisfy the complaint and there shall appear to be any reasonable ground for investigating the complaint, it shall be the duty of the Administrator or the Board to investigate the matters complained of. Whenever the Administrator or the Board is of the opinion that any complaint does not state facts which warrant an investigation or action, such complaint may be dismissed without hearing. In the case of complaints against a member of the Armed Forces of the United States acting in the performance of his official duties, the Administrator or the Board, as the case may be, shall refer the complaint to the Secretary of the department concerned for action. The Secretary shall, within ninety days after receiving such a complaint, inform the Administrator or the Board of his disposition of the complaint, including a report as to any corrective or disciplinary actions taken. INVESTIGATIONS ON INITIATIVE OF ADMINISTRATOR OR BOARD SEC. 1002. (b) The Administrator or Board, with respect to matters within their respective jurisdictions, is empowered at any time to institute an investigation, on their own initiative, in any case and as to any matter or thing within their respective jurisdictions, concerning which complaint is authorized to be made to or before the Administrator or Board by any provision of this Act, or concerning which any question may arise under any of the provisions of this Act, or relating to the enforcement of any of the provisions of this Act. The Administrator or the Board shall have the same power to proceed with any investigation instituted on their own motion as though it had been appealed to by complaint. ENTRY OF ORDERS FOR COMPLIANCE WITH ACT SEC. 1002. (c) If the Administrator or the Board finds, after notice and hearing, in any investigation instituted upon complaint or upon their own initiative, with respect to matters within their jurisdiction, that any person has failed to comply with any provision of this Act or any requirement established pursuant thereto, the Administrator or the Board shall issue an appropriate order to compel such person to comply therewith. [ER-327, 26 F.R. 4222, May 16, 1961, as amended by ER-369, 27 F.R. 12817, Dec. 28, 1962] Section 02-Administration of Accounting and Reporting Regulations Delegated authority. Under authority delegated by the Board as set forth in |