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REGULATIONS ON SETTLEMENT OF ACCOUNTS AND REPORTING OF TELECOMMUNICATIONS BUSINESS

Presidential Decree No. 20663, Feb. 29, 2008

Amended by Presidential Decree No. 22424, Oct. 1, 2010

Presidential Decree No. 23474, Dec. 30, 2011

Presidential Decree No. 24445, Mar. 23, 2013

CHAPTER I GENERAL PROVISIONS
 Article 1 (Purpose)
The purpose of this Decree is to provide for necessary regulations with which facilities-based service providers shall comply in the settlement of accounts and reporting pursuant to Article 49 of the Telecommunications Business Act. <Amended by Presidential Decree No. 22424, Oct. 1, 2010>
 Article 2 (Scope of Application)
This Decree shall apply to the facilities-based service providers defined under Article 5 of the Telecommunications Business Act (hereinafter referred to as the “Act”). <Amended by Presidential Decree No. 22424, Oct. 1, 2010>
 Article 3 (Purpose of Accounting of Telecommunications Business)
The purpose of the accounting of telecommunication business is to provide information useful to the Minister of Science, ICT and Future Planning, the relevant business operator, etc. for rendering reasonable judgment on matters related to fair competition in telecommunication business, including the computation of costs of telecommunications services, the computation of fees for interconnection of telecommunications systems and prices for providing facilities, the computation of compensation for losses incurred in relation to universal services, and cross-subsidization. <Amended by Presidential Decree No. 24445, Mar. 23, 2013>
 Article 4 (Principles in Accounting of Telecommunications Business)
(1) Accounts of telecommunications business shall be settled in accordance with the following principles:
1. The outcomes of settlement of accounts shall be presented in a reliable, fair, and reasonable manner, and accounting records shall be maintained so that all outcomes can be objectively verified;
2. A method shall apply consistently to the settlement of accounts, and shall not be altered at random;
3. Except as otherwise provided for in this Decree, accounting standards generally accepted as fair and reasonable shall apply to the settlement of accounts.
(2) The Minister of Science, ICT and Future Planning may prescribe and publicly notify more detailed rules necessary for the settlement of accounts of telecommunications business. <Amended by Presidential Decree No. 24445, Mar. 23, 2013>
 Article 5 (Kinds of Business Reports)
A business report on the accounting of telecommunications business shall consist of a statement of a financial position, an income statement, accompanying statements, and notes. <Amended by Presidential Decree No. 23474, Dec. 30, 2011>
 Article 6 (Separation of other Business Operations from Telecommunication Business)
The assets, incomes, expenses, etc. attributable to any business operation other than telecommunication business shall be earmarked, separately from those for telecommunication business.
CHAPTER II STATEMENT OF FINANCIAL POSITION
 Article 7 (Tangible and Intangible Assets for Telecommunication Business)
(1) Tangible assets for telecommunications business are as follows:
1. Telecommunications systems that directly form a telecommunications network;
2. General support assets that do not directly form a telecommunications network, but support such network, assets in transit, or assets under construction.
(2) Intangible assets for telecommunications business shall be defined as intangible assets acquired in relation to telecommunications business.
(3) The tangible and intangible assets for telecommunications business under paragraphs (1) and (2) (hereafter referred to as “tangible and intangible assets” in this paragraph) shall be classified as follows:
1. Tangible and intangible assets in use for telecommunications business: Assets not classifiable into those under subparagraph 2;
2. Tangible and intangible assets not in use for telecommunications business:
(a) Assets that have not been used for more than two years since they were acquired or completely constructed;
(b) Tangible and intangible assets that were used in the past for telecommunications business, but have not been used for more than two years.
 Article 8 (Classification of Telecommunications Systems in Use)
Telecommunications systems in use for telecommunications business shall be classified into the following categories according to the physical or technical form of each system:
1. Exchange system: Exchangers that enable telecommunications between lines by controlling and connecting multiple telecommunications lines and ancillary equipment;
2. Signal transmission system: Wired or wireless signal transmission terminal devices, multiplexers, distributors, and ancillary equipment for transmitting or receiving by converting, replaying, or amplifying codes, words, sound, or images received through an exchange system, terminal devices, etc.;
3. Wiring system: Filaments and cables made as transmitting media with copper wires, optical fiber, etc., which are used to transmit telecommunications signals in a certain format, and poles, conduit lines, telecommunications tunnels, pipelines, manholes, hand-holes, distribution panels, and ancillary equipment made to accept and connect such filaments and cables;
4. Terminal system: Terminal devices for accessing telecommunications networks and ancillary equipment;
5. Information processing system: Devices for storing and processing information in the form of letters, sound, images, etc. and ancillary equipment;
6. Power source system: Facilities for supplying electric power for telecommunications, including power substation equipment, rectifiers, storage batteries, power supply panels, spare generators, and wires.
 Article 9 (Classification of General Support Assets in Use)
The general support assets in use for telecommunications business shall be classified into the following categories:
1. Land: Building sites, forests, fields, paddies, miscellaneous land, etc.;
2. Building: Buildings, facilities for cooling and heating, lighting fixtures, facilities for ventilation, power source equipment not for telecommunications, and other facilities annexed to buildings;
3. Structure: Docks, bridges, piers, floating bridges, tracks, water reservoirs, mine shafts, chimneys, gardening facilities, and other civil engineering facilities or structures;
4. Ships: Ships and other water transportation means;
5. Vehicles: Railway vehicles, motor vehicles, and other land transportation means;
6. Other general support assets: General support assets not classifiable into any category of subparagraphs 1 through 5.
 Article 10 (Assets in Transit)
Assets in transit shall be defined as tangible assets for telecommunications business, already purchased but in transit on the date when accounts are settled.
 Article 11 (Assets under Construction)
Assets under construction shall be based on costs and expenses for raw materials, labor, etc. invested in order to construct tangible assets for telecommunications business and shall include contract amounts already paid for construction and machines, etc. acquired and possessed for the construction of facilities.
 Article 12 (Classification of Intangible Assets in Use)
Intangible assets in use for telecommunications business shall be classified into the following categories:
1. Goodwill;
2. Frequency licenses;
3. Industrial property rights;
4. Leaseholds;
5. Development costs;
6. Intangible assets not classifiable into any category under subparagraphs 1 through 5.
CHAPTER III INCOME STATEMENT
 Article 13 (Classification of Operating Revenue)
The operating revenue from telecommunications business shall be classified into: Charges received; access fees received; revenue from international settlement; revenue from internal transactions; revenue from self-consumption; and gains on compensation for losses on universal services.
 Article 14 (Classification of Operating Expenses, Non-Operating Expenses, etc.)
(1) Operating expenses for telecommunications business shall be classified into: Labor cost; expenses; depreciation cost; amortized intangible assets; ordinary development cost and research expenses; equipment usage fees; charges for international settlement; access fees; expenses for internal transactions; expenses for self-consumption, etc.
(2) Non-operating expenses for telecommunications business shall be classified into: Contributions; losses on the disposal of tangible assets related to telecommunications; expenses incurred in relation to compensation for losses on universal services; corporate tax expenses, etc.
CHAPTER IV SEPARATE ACCOUNTING OF SERVICES
 Article 15 (Principles in Separate Accounting of Services)
In order to prevent the artificial distribution of common assets, common revenue, and common expenses and the artificial measurement of expenses for internal transactions, a business operator shall allocate appropriate amounts for the following assets, revenue, and expenses separately and appropriately to each category of services under Article 16 so that the revenue and expenses for each category of services can be accurately calculated:
1. Tangible and intangible assets under Article 7;
2. Operating revenue under Article 13;
3. Operating expenses under Article 14 (1);
4. Non-operating expenses, etc. under Article 14 (2).
 Article 16 (Classification of Services)
(1) Telecommunications services subject to separate accounting shall be classified into the following categories: <Amended by Presidential Decree No. 23474, Dec. 30, 2011>
1. Facilities-based telecommunications services;
2. Value-added telecommunications services.
(2) Subcategories of telecommunications services under paragraph (1) shall be determined and publicly notified by the Minister of Science, ICT and Future Planning. <Amended by Presidential Decree No. 24445, Mar. 23, 2013>
 Article 17 (Separation of Operating Expenses, etc. for Services)
The separate accounting of tangible and intangible assets, operating revenue, operating expenses, non-operating expenses, etc. for each category of services under Article 15 shall be governed by standards determined and publicly notified by the Minister of Science, ICT and Future Planning. <Amended by Presidential Decree No. 24445, Mar. 23, 2013>
 Article 18 Deleted. <by Presidential Decree No. 23474, Dec. 30, 2011>
CHAPTER V SUPPLEMENTARY PROVISIONS
 Article 19 (Submission of Reports, etc.)
(1) A business operator shall submit the following documents to the Minister of Science, ICT and Future Planning within 90 days after the end of each fiscal year: <Amended by Presidential Decree No. 24445, Mar. 23, 2013>
1. A business report under Article 5;
2. Guidelines that describe, in detail, the classification and distribution of tangible and intangible assets and expenses.
(2) The standard form of a business report shall be determined and publicly notified by the Minister of Science, ICT and Future Planning. <Amended by Presidential Decree No. 24445, Mar. 23, 2013>
 Article 20 (Verification of Reports)
If the Minister of Science, ICT and Future Planning deems it necessary to verify a business report submitted pursuant to Article 19 (1), he/she may require the relevant business operator to submit documents, etc. related to accounting. <Amended by Presidential Decree No. 24445, Mar. 23, 2013>
ADDENDUM <Presidential Decree No. 20663, Feb. 29, 2008>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 22424, Oct. 1, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 10 Omitted.
ADDENDUM <Presidential Decree No. 23474, Dec. 30, 2011>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 24445, Mar. 23, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 4 Omitted.