The cost of tools purchased for exclusive use in connection with construction work shall be included in the accounts to which the cost of the work is charged. Upon completion of the work the amount realized from the sale of such tools or their appraised value, if retained upon completion of the work for which purchased, shall be credited to the accounts originally charged with their cost.**

14.5-4 Property retired and replaced. When property other than land, the cost of which has been charged to the accounts of this classification, is abandoned, demolished, or otherwise retired from service for the purpose of or by reason of its replacement with property for like purpose, the appropriate accounts of this classification shall be credited with the amounts at which such property stands charged therein at the time of such retirement. Concurrently, balance-sheet account No. 443, "Accrued depreciation-Road and equipment," shall be charged with the amount carried therein, if any, with respect to the property retired; proper account shall be taken of salvage and insurance, and the remainder, together with expenses incident to the abandonment, shall be charged to the appropriate operating expense account.

The provisions of this section are applicable in accounting (at the time of retirement) for the cost of property abandoned, even though the new property has been actually installed previously to the date of the demolishment of the old property.**

14.5-5 Property retired and not replaced. When property other than land and equipment (see 88 14.5-7, 14.5-8), the cost of which has been charged to the accounts of this classification, is abandoned, demolished, or otherwise retired from service, and not replaced, the appropriate accounts of this classification shall be credited with the amounts at which such property stands charged therein at the time of such destruction or retirement. Concurrently, balance-sheet account No. 443, "Accrued depreciation-Road and equipment," shall be charged with the amount carried therein, if any, with respect to such property destroyed or otherwise retired; proper account shall be taken of salvage and insurance; and the remainder, together with expenses incident to the abandonment, shall be charged to Profit and Loss Account.**

14.5-6 Adjustments for converted property. When a building, structure, or unit of equipment is so converted as to require that the amount of investment in such property be transferred from one account in this classification to another, the account in which the property was originally carried shall be credited with the amount at which such property stands charged therein at the time of its conversion. This amount, less depreciation, salvage recovered in the conversion, and cost of any part abandoned, and increased by the cost of improvements, shall be charged to the account in this classification appropriate for the cost of the property in its converted form. The charge for the converted property in no case shall exceed the cost (at current market prices of labor and material) of new property of equal capacity and equal expectation of life in service, less a suit

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

able allowance on account of the second hand portions remaining therein.**

14.5-7 Land sold or reclassed. If any land the cost of which has been included in the accounts of this classification is sold, the appropriate account shall be credited with the amount at which such property stands charged therein at the time of the disposal, and the difference between the amount thus credited and the amount received from the sale or disposal of the property shall be included in Profit and Loss.

When the use of land in transportation service or in operations incident thereto is discontinued and the land is retained in possession by the carrier, the appropriate account in this classification shall be credited with the amount at which such land stands charged therein and concurrently this amount shall be charged to balance-sheet account No. 404, "Miscellaneous physical property." **

14.5-8 Equipment retired. The instructions for accounting for equipment retired are contained under the general account Equipment.*t

14.5-9 Equipment costs paid in installments. When any equipment is acquired under a so-called trust agreement or any agreement which provides that the cost shall be paid in installments, the cost (its cash value at time of purchase) shall be charged to the accounts in this classification at the time of its acquisition in the same manner as the cost of equipment purchased outright. The discount or premium, if any, on securities issued in payment or in part payment for such equipment shall be debited or credited to the proper discount or premium accounts in accordance with general balance-sheet instructions, § 14.4-3.*†

14.5-10 Salvage from equipment, tools, etc. When the cost of any work equipment, machinery, tools, or material and supplies obtained for use in construction work has been charged to accounts in this classification and the entire value thereof has not been consumed in the work, the residual value of such work equipment, machinery, tools, or material and supplies shall be credited upon the completion of the work to the accounts to which originally charged, and concurrently charged to the material and supply account or other appropriate account.**

14.5-11 Incidental services of employees. No charge shall be made against road and equipment accounts for the salaries of officers and employees who perform incidental services in connection with construction or addition and betterment work, although traveling and incidental expenses incurred by officers and employees on account of such work may be included in the account to which the cost of the work is chargeable. When officers or employees give all or a substantial proportion of their time to construction or to addition or betterment work the whole or an equitable proportion of their salaries and their traveling and incidental expenses in connection with such work shall be included in the cost of the work.*†

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

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ROAD AND EQUIPMENT ACCOUNTS

I. WAY AND STRUCTURES

14.501 Engineering and superintendence. This account shall include expenditures for services and expenses of engineers, draftsmen, and superintendents employed on preliminary and construction work, or in making additions or betterments to the accounting carrier's road; also expenses incident to engineering and superintendence not assignable to other accounts.*†

NOTE A: When employees designated above are engaged in work not chargeable to construction, their pay and expenses shall be charged to the specific work on which engaged. When any of the expenses above designated can be charged directly to the account for which incurred, they shall be so charged.

NOTE B: Expenditures for tentative or preliminary surveys and tests shall be carried in a suspense account until it is determined whether or not to continue the work. If the project is continued, such expenditures shall then be transferred to this account, and if abandoned, to operating expense, income, or profit and loss accounts, as may be appropriate.

†In §§ 14.501 to 14.550, inclusive, the numbers to the right of the decimal point correspond with the respective account numbers in Uniform system of accounts for electric railways (road and equipment accounts), Interstate Commerce Commission, May 28, 1914. Cross references to accounts are made by citing the account number, e. g., account No. 503, instead of the corresponding section number (§ 14.503).

14.502 Right of way. This account shall include the cost of land acquired for roadway; expenses of appraisals, or juries, commissioners, or arbitrators in condemnation cases; cost of removal of buildings (if upon right of way, and not included in property purchased); commissions paid outside parties for purchase of properties for these purposes; cost of plats, abstracts, notarial fees, recording deeds, etc.; payment for abutting damages and legal services in suits connected therewith; assessments levied by public authorities or amounts payable for the construction or the improvement of roads, streets, sidewalks, curbs, gutters, sewers, ditches, etc. (except paving). To this account shall also be charged the cost of moving other companies' poles for proper clearance.

To this account shall be credited proceeds from the sale of timber or other property purchased with right of way.

The estimated value of property not required in connection with the operation of the road after completion thereof, but acquired and charged to this account in connection with land needed for right of way, shall, upon completion of the road, be credited to this account and charged to account No. 503, "Other land used in electric railway operations," or account No. 404, "Miscellaneous physical property," as may be appropriate. If such property is sold upon or prior to the completion of the road, the proceeds of sale thereof shall be credited to this account.**

NOTE: The $100 minimum does not apply to items chargeable to this account. (See § 14.5-1.)

14.503 Other land used in electric railway operations. This account shall include the cost of land acquired for use directly in connection with the operation of the road, but not acquired for road

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

way, including all expenses incurred in connection with such acquisition.**

NOTE A: The $100 minimum does not apply to items chargeable to this account. (See § 14.5-1.)

NOTE B: Proceeds from sale of timber or of improvements purchased with land charged to this account shall be credited hereto.

14.504 Grading. This account shall include the cost of clearing and grading roadway, whether by excavations or embankments; ditching roadway and making ditches for waterways; also cost of retaining walls and other masonry or riprap for the protection of embankments, cuts, and slopes.

This account shall include such items as the cost of steam shovels and tools used in grading, less credit for inventory or selling values upon completion of grading.

When a bridge or trestle or a portion thereof is filled, the cost of filling and the estimated cost of temporary trestling required for the purpose of filling shall be charged to this account.**

14.505 Ballast. This account shall include the cost of ballast, whether of broken stone, slag, gravel, concrete, or other material; cost of transportation and handling (except final distribution); also the cost of ballast applied in excess of that required to restore the ballast to its original height and width; and the excess cost of improved ballast used in renewals over the original cost of the ballast removed.**

NOTE A: If ballast produced is chargeable partly to construction and partly to maintenance, a clearing account may be opened in order to determine the unit of cost which is to be used in arriving at the amounts chargeable to construction and maintenance.

NOTE B: The cost of labor expended in spreading and putting ballast under track shall be charged to account No. 510, "Track and roadway labor."

14.506 Ties. This account shall include the cost of cross, switch, bridge, and other track ties used in the construction of tracks, and the cost of additional ties subsequently laid in such tracks; cost of transportation and handling (except final distribution); the pay and expenses of employees engaged in obtaining, purchasing, treating, framing, and inspecting ties for construction purposes; also the excess cost of improved ties over the original cost of ties removed and replaced.**

NOTE: The cost of labor for unloading, distributing, and placing ties in tracks shall be charged to account No. 510, "Track and roadway labor."

14.507 Rails, rail fastenings, and joints. This account shall include the cost of rails (including guard rails), rail fastenings, and joints used in construction of tracks; the cost of transportation, inspection, and handling (except final distribution); and the excess cost of heavier or improved type or quality of rails, rail fastenings, and joints over the original cost of rails, rail fastenings, and joints removed and replaced.**

NOTE A: Guard rails used in connection with special work shall be charged to account No. 508, "Special work."

NOTE B: The cost of labor for unloading, distributing, and placing rails, rail fastenings, and joints in track shall be charged to account No. 510, "Track and roadway labor."

14.508 Special work. This account shall include the cost of special work, including steam and street railroad crossings, crossovers,

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

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curves, frogs, run-offs, switches, switch mates, and turnouts; guard rails used in connection with special work; also the excess cost of heavier or improved type of special work over the original cost of such work removed and replaced. To this account shall also be charged the cost of transportation, inspection, and handling (except final distribution).

The terms crossovers, curves, and turnouts cover only those portions of track which are made to order.**

NOTE A: This account is not intended to cover the cost of ties, rails, rail fastenings, and joints. These items shall be charged to accounts provided for such expenditures. Plain curves shall be treated as rails.

NOTE B: The cost of labor for unloading, distributing, and placing special work in track shall be charged to account No. 510, "Track and roadway labor."

14.509 Underground construction. This account is to be used only by railways operated by underground electric contact system, or by those operated by cable traction.

This account shall include the cost of underground construction, including cost of excavating for underground construction, and cost of yokes, concrete work, manhole frames and covers, slot rails, drain pipes, pulleys, sheaves, and other fixtures and appurtenances peculiar to underground electric or cable construction. To this account shall be charged also the cost of transportation, inspection, and handling (except final distribution).**

NOTE A: The cost of track rails, track rail fastenings and joints, electric contact rails and insulators, and cables of cable railways, shall not be charged to this account. NOTE B: The cost of labor unloading, distributing, and placing the materials described above shall be charged to account No. 510, “Track and roadway labor." 14.510 Track and roadway labor. This account shall include the cost of labor expended in distributing, laying, and adjusting ties, rails, ballast, frogs, switches, special work, and other track material and appurtenances used in the construction of tracks. The cost of laying and surfacing tracks through tunnels and on bridges and trestles shall be included in this account.**

NOTE A: The cost of distributing and adjusting ties, rails, ballast, frogs, switches, and other track material for replacements shall be charged to Operating Expenses.

NOTE B: The cost of transporting ballast and unloading at delivery point shall be charged to account No. 505, "Ballast."

14.511 Paving. This account shall include the cost of labor and material (including macadam) for paving about tracks and special work, and for crosswalks incident to track construction; also the excess cost of improved paving over the original cost of paving removed and replaced. This account shall also include assessments levied by public authorities or amounts payable under franchise requirements for new or improved paving. The cost of replacing paving taken up on account of construction shall also be charged to this account.** 14.512 Roadway machinery and tools. This account shall include the cost of the initial outfit of roadway machinery and tools provided for the maintenance of roadway and structures at the time the road is opened for commercial traffic, the cost of additional roadway machinery and tools acquired subsequently, and also the excess cost of

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