NOTE: Secured notes and time loans payable more than 1 year from date of issue shall be included in account No. 427, "Funded debt unmatured."

14.431 Audited accounts and wages payable. This account shall include the amount of audited vouchers or accounts and audited pay rolls unpaid on the date of the balance sheet; also balances representing unclaimed wages and outstanding pay and time or discharge checks issued in payment of wages and all other unpaid vouchered items.*†

14.432 Miscellaneous accounts payable. This account shall include the net amount owed to other companies, in favor of each of which there is a net credit balance in the total of the accounts representing interline freight, passenger, and baggage revenues, and charges for equipment interchanged on a per diem, or mileage basis; also unpaid and outstanding drafts drawn by station agents, and other items of the nature of demand liabilities, not covered by accounts Nos. 430, 431, 433, and 434.*†

NOTE: The amount to be reported under this account is not the net balance between this account and account No. 410, "Miscellaneous accounts receivable." 14.433 Matured interest, dividends, and rents unpaid. This account shall include the amount of matured and unpaid interest on loans and funded debt of the accounting company, on debt of other companies assumed by the accounting company, and on receiver's certificates; the amount of dividends payable on capital stock, but unpaid, uncalled for, or unclaimed at the date of the balance sheet; unpaid dividends on the stock and unpaid interest on the funded debt of other companies when such are payable by the accounting company as all or a portion of the rent due under terms of leases or otherwise; and all other rents due and payable for property held under leases.

Items above indicated which mature on the first day following that for which the balance sheet is made shall be included in this account.** 14.434 Matured funded debt unpaid. This account shall include the amount of funded debt matured and unpaid without specific agreement for extension as to time of payment, including unpresented bonds drawn for redemption through the operation of sinking and redemption fund agreements.**

14.435 Accrued interest, dividends, and rents payable. This account shall include the amount of interest on loans, funded debt, and receiver's certificates issued or assumed, dividends declared on capital stock, and rents under leases, accrued to the date for which the balance sheet is made but not payable until after the first day following that date. There shall be included also as rents accrued the amount of accrued dividends on the stock and accrued interest on the funded debt of other companies when such dividends and interest are payable by the accounting company as all or a portion of the rent under leases from those companies.**

14.436 Other current liabilities. This account shall include items of current liabilities not covered by accounts Nos. 430 to 435, inclusive.*t

14.437 Liability for provident funds. This account shall include the ledger balances representing the liability of the accounting carrier

*For statutory citation, see note to § 14.00-1.

Page 333

for the amount of assets (whether contributed by the carrier, by the employees, or by others) in the possession of the carrier or of trustees or managers acting for it in the administration of employees' pension, savings, relief, hospital, and other association funds.*+

14.438 Other deferred liabilities. This account shall include items of deferred liabilities not covered by account No. 437, such as retained percentages due contractors, to be paid on completion of contracts; amounts deposited with the accounting company to cover the cost of employees' outfits; deposits made by customers and others under contract when such deposits are returnable; and other similar items.**

14.439 Tax liability. This account shall include the amount of all taxes accrued to the date of the balance sheet and unpaid. When the accounting company leases property and under the terms of the lease agrees to assume and make direct payment of the taxes that may be levied upon or assessed against such property, the taxes accrued on such property shall be included in this account. If the taxes paid are in excess of the taxes accrued, the amount of the excess shall be shown in red.**

14.440 Premium on funded debt. This account shall include the total of the net credit balances in the discount, expense, and premium accounts for the several classes of funded debt. (See § 14.4-3.)*+

14.441 Insurance and casualty reserves. This account shall include the net credit balance in the accounts to which are credited specific appropriations of surplus and such insurance premiums as are concurrently charged to Operating Expenses to cover self-carried risks on fire, fidelity, boiler, casualty, burglar, and other insurance, and to which are charged losses sustained on items protected by such insurance.**

14.442 Operating reserves. This account shall include the balances representing reserves created by charges to Operating Revenues or to Operating Expenses to provide for overcharge, personal injury, loss and damage, and other claims, for equalization, and for similar purposes, such charges being made currently for the purpose of equalizing charges to operating accounts for the current accounting year. (See § 14.0-5.)*+

NOTE: The credit balances in reserve accounts representing appropriations of surplus for sinking funds, etc., shall not be included in this account. (See accounts Nos. 449 and 450.) Reserves for depreciation of railway property shall be included in account No. 443, "Accrued depreciation-Road and equipment," and No. 445, "Accrued depreciation-Miscellaneous physical property," and reserves for amortization of franchises in account No. 444, "Reserve for amortization of franchises."

14.443 Accrued depreciation-Road and equipment. To this account shall be credited amounts charged to operating expense or other accounts to cover the depreciation on property and equipment the cost of which is included in account No. 401, "Road and equip

ment."

To this account shall be charged only such amounts as have been previously credited hereto with respect to any property or equipment destroyed, sold, or otherwise retired from service.**

Page 334

*For statutory citation, see note to § 14.00-1.

14.444 Reserve for amortization of franchises. To this account shall be credited amounts charged to Operating Expenses or surplus in order to provide for the amortization or extinguishment of limited franchises.*†

NOTE: See Note B of account No. 545, "Franchises."

14.445 Accrued depreciation-Miscellaneous physical property. To this account shall be credited amounts charged to Income to cover the depreciation of property the cost of which is included in account No. 404, "Miscellaneous physical property.'

To this account shall be charged only such amounts as have been previously credited hereto with respect to any such property destroyed, sold, or otherwise retired from service.*+

14.446 Other unadjusted credits. This account shall include the amount of credit balances in suspense accounts that can not be entirely cleared and disposed of until additional information is received, such as amounts realized from the sale of damaged, unclaimed, and over freight and held pending claim; amounts in suspense for prepaid ticket orders, unredeemed or unused tickets, and mileage coupons; and other similar items.*†

14.447 Additions to property through surplus. This account shall include such amounts of surplus as have been definitely appropriated or set aside, and expended since December 31, 1908, in the construction or acquisition of property the cost of which is included in property investment accounts other than those for securities, including amounts expended in the retirement of trust obligations for the purchase of equipment; also the amount of donations in aid of construction made by individuals and companies when not subject to distribution as dividends. Investments in road and equipment and in miscellaneous physical property shall be shown separately in the accounting company's records.

This account may also include amounts definitely appropriated or set aside, and expended prior to December 31, 1908. If such amounts are included, the account shall be divided into (a) Expended to December 31, 1908, and (b) Expended since December 31, 1908.*†

NOTE: Temporary appropriations for the acquisition of property the cost of which is intended later to be met through an issue of securities shall not be included in this account.

14.448 Funded debt retired through surplus. This account shall include the total amount of appropriated surplus expended in the discharge of the principal (less the discount, if any, suffered at the time of sale) of any funded debt, except trust obligations for the purchase of equipment, issued or assumed by the accounting company and retired through sinking or other funds provided from surplus.

This account may include also amounts definitely appropriated or set aside and expended prior to December 31, 1908. If such amounts are included, the account shall be divided into (a) Expended to December 31, 1908, and (b) Expended since December 31, 1908.*+

NOTE A: Temporary appropriations for the payment of obligations which are intended to be replaced by new issues shall not be included in this account.

NOTE B: Amounts of appropriated surplus expended in retirement of trust obligations issued for the purchase of equipment shall be included in account No. 447, "Additions to property through surplus."

*For statutory citation, see note to § 14.00-1.

Page 335

14.449 Sinking fund reserves. This account shall include the unexpended balances in accounts to which are credited definite appropriations of surplus, whether held in general funds or specifically set aside in the hands of trustees for sinking and redemption funds. It shall also include income accretions to such funds retained therein.*† 14.450 Miscellaneous fund reserves. This account shall include the net balances in accounts to which are credited definite appropriations of surplus, whether held in general funds or specifically set aside in the hands of trustees and not provided for elsewhere. It shall also include income accretions to such funds retained therein.**

14.451 Profit and loss-Balance. This account shall include the balance at the close of the fiscal period as shown in the Profit and Loss Account.**

GENERAL INSTRUCTIONS-ROAD AND EQUIPMENT ACCOUNTS

14.5-1 Application of this classification. The accounts prescribed in this classification contain the rules in accordance with which shall be classified the investment of electric railway companies in property used by them in transportation operations, in operations incident thereto, or in auxiliary operations.

These accounts shall include all expenditures for original road and equipment and for additions and betterments thereto, regardless of the way in which the funds for the construction or acquisition have been provided. Such expenditures shall not be charged to Operating Expenses, Income, Profit and Loss, or to special funds in such manner as to exclude from the property accounts any expenditure for road and equipment or for additions and betterments thereto.

These accounts shall also include the necessary credits to represent the original cost of property or equipment abandoned, destroyed, sold, or otherwise retired from service. Wherever the term original cost is referred to in this classification and such cost can not be ascertained, an estimate of the original cost shall be used.

When the property change involves the acquisition of property (other than land, a section of track, or a unit of equipment) the cost of which is less than $100; the betterment of property (see the second paragraph of § 14.5-2) the excess cost of which is less than $100; or the retirement of property (other than land, a section of track, or a unit of equipment) the ledger value of which is less than $100, the cost of the property acquired or the value of the salvage from the property retired shall be appropriately included in operating expenses, and no adjustment shall be made in the property investment

account.

The carrier shall not parcel expenditures or retirements under a general plan for the purpose of bringing the accounting therefor within this rule, neither shall it combine unrelated items of property for the purpose of excluding the accounting therefor from the rule.

This exception to the general instructions of this classification shall not apply to property changes involving the retirement and replacement of property when either the ledger value of the property retired

Page 336

*For statutory citation, see note to § 14.00-1.

or the cost of the property acquired is $100 or more. The accounting for such changes shall be in accordance with § 14.5–4.

The carrier is permitted to adopt for the purpose of its accounting a limit of less than the aforesaid amounts provided it first files with the Commission the maximum amount which it proposes to adopt and makes no subsequent change in this amount except by authority of the Commission.*t [As amended July 21, 1928]

In 88 14.5-1 to 14.5-11, inclusive, the numbers to the right of the dash correspond with the respective general instruction numbers in Uniform system of accounts for electric railways (road and equipment accounts), Interstate Commerce Commission, May 28, 1914. The amendment of June 21 1928, is noted in brackets following section affected. Cross references to accounts are made by citing the account number, e. g., account No. 443, instead of the corresponding section number (§ 14.443).

14.5-2 Additions and betterments defined. Additions are structures, facilities, equipment, and other properties added to those in service at the beginning of operations and not taking the place of any property for like purpose previously held by the accounting

company.

Betterments are physical changes in roadway, structures, facilities, or equipment, the object of which is to make the properties affected more useful or of greater capacity than they were at the time of their installation or acquisition. These accounts shall include only such portion of the cost of betterments as will, when added to the original cost of the property bettered, give the value of the property in its bettered condition. The remainder of the cost of the change shall be classed as a repair and charged to the appropriate operating expense accounts. When it is necessary substantially to reconstruct or to replace a major portion of any unit of property or any important section of a continuous structure, the cost of the property removed or replaced shall be credited to the appropriate account in this classification and the new property shall be charged thereto.*†

14.5-3 Basis of charges. The charges to the accounts of this classification on account of expenditures for the acquisition of property and for improvements shall be based upon the actual cost of the property and the improvements. When the consideration given for the purchase of property or for the improvement of property chargeable to the accounts of this classification is anything other than money, the money value of the consideration at the time of the transaction shall be charged to these accounts and the actual consideration shall be described in the record with sufficient particularity to identify it. The charges for material included in the accounts of this classification shall be upon the basis of the net cost thereof, including transportation charges paid by the accounting carrier. The estimated cost of transporting material, when used for construction, addition, and betterment purposes, in revenue cars over the accounting carrier's own line may be included in the cost of material. If such charges are made, the amount thereof shall be credited to operating expense general account "Transportation for investment-Cr." If materials and supplies are passed through storehouses, their cost entered in these accounts may include a suitable proportion of store expenses.

*For statutory citation, see note to § 14.00–1.

Page 337