Anschutz Company and Subsidiaries - Page 50

                                       - 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

Last modified: May 25, 2011