The Postal Accountability and Enhancement Act (P.L.109-435), enacted December 20, 2006, made significant reforms in the governance of the Postal Service and significantly altered some of our financial responsibilities, particularly with respect to the funding of Civil Service Retirement System (CSRS) benefits and retiree health benefits. See Note 4, Postal Accountability and Enhancement Act, Public Law 109-435 (P.L. 109-435), in the Notes to the Financial Statements for additional information.
We enter into significant transactions with other U.S. government agencies, as disclosed throughout these financial statements.
Note 2 — Summary of significant accounting policies
Basis of Accounting and Use of Estimates
We conform to accounting principles generally accepted in the United States (GAAP) and maintain our accounting records and prepare financial statements on the accrual basis of accounting. Following these principles, we make estimates and assumptions that affect the amounts reported in the Financial Statements and Notes. Actual results may differ from estimates.
Segment Information
We operate in one segment throughout the United States, its possessions and territories, and internationally.
Reclassifications
Certain comparative prior year amounts related to deferred gains that we have determined are immaterial to the financial statements and accompanying notes have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported operating income and net income.
Cash and Cash Equivalents
We consider securities that mature within 90 days or less from the date that we buy them to be cash equivalents.
Allowance for Doubtful Accounts
We provide an allowance for doubtful accounts on outstanding receivables based on our collection history and an estimate of uncollectible accounts.
Allowance for Doubtful Accounts |
2008 |
2007 |
2006 |
|---|---|---|---|
(Dollars in millions) |
|||
Beginning Balance |
$ 44 |
$ 48 |
$ 50 |
Provision for Doubtful Accounts |
7 |
12 |
3 |
Writeoffs |
10 |
16 |
5 |
Ending Balance |
$ 41 |
$ 44 |
$ 48 |
Supplies and Repair Parts
Supplies and repair parts consist of repair parts for mail processing equipment. We value these at average cost. Total supplies and repair parts amounted to $112 million at the end of 2008 and $119 million at the end of 2007. A majority of our motor vehicle spare parts are supplied through consignment agreements.
Property and Equipment
We record property and equipment at cost, including interest paid on the money we borrow to pay for the construction of major capital additions. See Note 6, Property and equipment, in the Notes to the Financial Statements for additional information.
We depreciate buildings and equipment over their estimated useful lives, which range from 3 to 40 years, except buildings with historic status, which are depreciated over 75 years, using the straight-line method.
Impaired Assets
We record losses on long-lived assets when events and circumstances indicate that the assets might be impaired. In accordance with Financial Accounting Standards Board Statement 144, Accounting for the Impairment or Disposal of Long-Lived Assets, we write down impaired assets to the lower of cost or fair value. See Note 6, Property and equipment, in the Notes to the Financial Statements for additional information.
Asset Retirement Obligations
We account for asset retirement obligations in accordance with Financial Accounting Standards Board Interpretation 47, Accounting for Conditional Asset Removal (FIN 47). Accruals are recorded under “Noncurrent Liabilities, Contingent liabilities, and other” on our balance sheets.