N.Y. Comp. Codes R. & Regs. tit. 16, § 563.10 – Additions and retirements of water plant.

(a) For the purpose of avoiding undue refinement in accounting for additions to and retirements and replacements of water plant, all property shall be considered as consisting of:
1. (1) retirement units; and
2. (2) minor items of property.
  Each utility shall use such list of retirement units as is in use by it at the effective date hereof, or as may be prescribed by the commission. Not later than December 31st of the year in which a utility first becomes subject to this system of accounts, it shall file with the commission a list of the items of property it proposes to account for as retirement units of property. Revisions of such list may be made at any time by appropriate filing thereof with the commission.
(b) The addition and retirement of retirement units shall be accounted for as follows:
1. (1) When a retirement unit is added to the water plant, the cost thereof shall be added to the appropriate water plant account, except that when units are acquired in the acquisition of any water plant constituting an operating system, they shall be accounted for as provided in water plant instruction, section 563.5 of this Part.
2. (2) When property ceases to be used and useful in water service, it shall be retired immediately from the water plant accounts. When a retirement unit is retired from water plant with or without replacement, the book cost thereof shall be credited to the water plant account in which it is included, determined in the manner set forth in subdivision (d) of this section. If the retirement unit is of a depreciable class, the book cost of the unit retired and credited to water plant shall be charged to the accumulated provision for depreciation applicable to such property. The cost of removal and the salvage shall be charged or credited, as appropriate, to such depreciation account. (See also account 108 and water plant instruction, section 563.11 of this Part.)
(c) The addition and retirement of minor items of property shall be accounted for as follows:
1. (1) When a minor item of property which does not replace a similar item and which is a part of or associated with a retirement unit and will be accounted for and retired together with such unit, and which by itself or together with other similar items makes a substantial addition, is added to the plant, the cost thereof shall be added to the appropriate water plant account; otherwise the cost of any minor item of property shall be charged to the appropriate maintenance account. The amount added to water plant accounts for such minor items shall not, however, exceed the additional cost computed at current prices that would have been incurred if the minor items had been installed together with the retirement units to which they are related.
2. (2) When a minor item of property is retired and not replaced, the book cost thereof shall be credited to the water plant account in which it is included; and, in the event the minor item is a part of depreciable plant, the account for accumulated provision for depreciation shall be charged with the book cost and cost of removal and credited with the salvage. If, however, the book cost of the minor item retired and not replaced has been or will be accounted for by its inclusion in the retirement unit of which it is a part when such unit is retired, no separate credit to the property account is required when such minor item is retired.
3. (3) When a minor item of depreciable property is replaced independently of the retirement unit of which it is a part, the cost of replacement shall be charged to the maintenance account appropriate for the item, except that if the replacement effects a substantial betterment (the primary aim of which is to make the property affected more useful, more efficient, or of greater durability, or of greater capacity), the excess cost of the replacement over the estimated cost at current prices of replacing without betterment shall be charged to the appropriate water plant account.
(d) The book cost of water plant retired shall be the amount at which such property is included in the water plant accounts, including all components of construction costs. The book cost shall be determined from the utility's records, and if this cannot be done it shall be estimated. When it is impracticable to determine the book cost of each unit, due to the relatively large number or small cost thereof, an appropriate average book cost of the units, with due allowance for any differences in size and character, shall be used as the book cost of the units retired.
(e) The book cost of land retired shall be credited to the appropriate land account. If the land is sold, the difference between the book cost (less any accumulated provision for depreciation, or amortization therefor which has been authorized and provided) and the sale price of the land (less commissions and other expenses of making the sale) shall be recorded in account 117, Accumulated Gains and Losses from Disposition of Utility Land and Land Rights, when the property has been used in utility service, or recorded in account 105, Water Plant Held for Future Use; otherwise such difference shall be included in accounts 421.1, Gain on Disposition of Property, or 421.2, Loss on Disposition of Property, as appropriate. If land is not used in utility service but is retained by the utility, such property shall be charged to account 105, Water Plant Held for Future Use, or account 121, Nonutility Property, as appropriate, in accordance with instructions contained in section 563.12, Transfers of Property.
(f) The book cost less net salvage of depreciable water plant retired shall be charged in its entirety to account 108, Accumulated Provision for Depreciation of Water Plant in Service. Any amounts which, by approval or order of the commission, are charged to account 182, Extraordinary Property Losses, shall be credited to account 108, Accumulated Provision for Depreciation of Water Plant in Service.
(g) The accounting for the retirement of amounts, included in account 302, Franchises and Consents, and account 303, Miscellaneous Intangible Plant, and the items of limited-term interest in land included in the accounts for land and land rights, shall be as provided for in the text of account 111, Accumulated Provision for Amortization of Water Plant in Service, account 404, Amortization of Limited-term Water Plant, and account 405, Amortization of Other Water Plant.
(h) The ledgers containing the primary water plant accounts and subdivisions thereof shall be kept so as to show on their face (1) additions, (2) retirements, and (3) transfers and adjustments. Corrections of errors and adjustments to additions or retirements in the current or preceding year shall be classified as additions or retirements.
(i) The cost of paving disturbed, including replacing pavement, pavement base and sidewalks, shall be included in the water plant accounts only when incurred in connection with the addition of one or more retirement units of property; and the cost associated with a particular retirement unit shall be retired when that retirement unit is retired, irrespective of whether the paving itself has a shorter or longer life. No addition (except charges to land for public improvements) shall be made to any water plant account for cost of paving installed in public streets which is not directly occasioned by the installation of property constituting one or more retirement units with which the paving cost is associated as an element of cost.