- 50 - conduit was speculative and Qwest knew that the retained conduit could potentially have little or no value. Respondent’s accounting expert, Professor Charlotte Wright (Professor Wright), testified: the question put to me was, Would an incremental cost accounting method * * * present a true and fair view of the results of operations during the current period. And then since these would be--capitalize future economic performance, it concerned me that a method that resulted in only minor costs--a minor amount of costs being capitalized * * * would result in an understatement of their assets in the current period and then, going forward, an overstatement for financial reporting of their profits in the future * * *. However, Professor Wright concluded that “if there was a genuine concern that you would never recover an allocated portion of the total costs, then a method that allocated less to the retained assets, such as an incremental method, would be appropriate.” Petitioners firmly established that the value of Qwest’s retained conduits was uncertain when the cost allocations were made. Respondent’s expert testified that when the future economic benefit of a retained asset is uncertain, a method that allocates less expense to that asset may be appropriate. Accordingly, we find that Qwest’s incremental cost allocation method was not used to distort the organization of economic activity and does not violate congressional intent.Page: Previous 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 Next
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