the cost or book value of securities and other assets in the hands of trustees or managers of employees' pension funds, savings funds, relief, hospital, and other association funds (whether contributed by the company, by employees, or by others), when such trustees or managers are acting for the company in the administration of such funds; also the amount of such funds held in the company's treasury.*† [WB 51]

22.552 Open voyage revenues. In this account should be included the amount representing revenue accrued and held in suspense until the completion of the voyages of the vessels from which the revenue is derived.** [WB 52]

22.553 Other deferred credit items. Under this account should be included the amount of credit balances in suspense accounts that can not be entirely cleared and disposed of until additional information is received, such as collections by agents and others to cover prepayment on shipments originating on the lines of other carriers; amounts realized from the sale of damaged, unclaimed, and over shipments and held pending claim; credit balances in shop expense and store expense accounts; and other similar items.*+ [WB 53]

APPROPRIATED SURPLUS

22.554 Surplus invested in property since December 31, 1912. This account should include the total amount of appropriated income or surplus expended since December 31, 1912, in the acquisition of property and for improvements, the cost of which is proper, under the classification prescribed for such expenditures, to be included in the accounts making up the total of real property and equipment, such as the cost of property used in the company's operations as a carrier, the proportion of the cost of projects involving additions and betterments required to be included in such accounts; also amounts of appropriated income or surplus expended since December 31, 1912, in the discharge of the principal (less the discount, if any, suffered at the time of sale) of any indebtedness incurred in the acquisition or improvement of property the cost of which is included in real property and equipment accounts.** [WB 54]

NOTE: This account is intended to include only appropriations of income or surplus definitely set aside for the acquistion of property or for improvements the cost of which should be included in the real property and equipment accounts as shown on the balance sheet. When property is purchased or improvements are made by an advance of cash which is intended to be replaced with the proceeds of a subsequent sale of securities, the amount so advanced should not be included in this account; nor should there be included advances not intended to be replaced by securities, unless the amounts advanced have been definitely appropriated and are considered appropriated surplus as distinguished from Profit and Loss-Balance.

22.555 Surplus invested in property to December 31, 1912. If a carrier elects to set up the amounts of invested surplus appropriated before January 1, 1913, such appropriations having been made in all other respects under the conditions stated in account WB 54, the total of the amounts so set up should be shown in this account.*+ [WB 55]

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*For statutory citation, see note to § 22.00-1.

22.556 Reserves from income or surplus. In this account should be grouped all appropriations of income or surplus held in reserve (except as covered by accounts WB 51, WB 54, and WB 55), including unexpended balances of appropriations from income or surplus for additions and betterments. This account should be subdivided under the following heads:

(a) Invested in sinking funds: Amounts charged against Income or Surplus for sinking-fund payments, and accretions to such funds in the hands of trustees.

(b) Invested in other reserve funds.

(c) Not specifically invested.* [WB 56]

PROFIT AND Loss

22.557 Balance. This account should include the credit balance in the Profit and Loss Account.

When the Profit and Loss account shows a debit balance the amount of which does not exceed the appropriated surplus included in accounts WB 54, WB 55, and WB 56, it should be stated on the liability side of the balance sheet and deducted from their total, the difference being extended to the total column as the net corporate surplus. When, however, the debit balance in Profit and Loss exceeds the appropriated surplus as shown in accounts WB 54, WB 55, and WB 56, the amounts in those accounts should be stated as deduction items on the asset side of the balance sheet immediately following Profit and Loss-Balance, from which they should be deducted, the difference being extended as the net corporate deficit. (See account WB 32.)*† [WB 57]

PART 23-CARRIERS BY WATER: DEPRECIATION

CHARGES

Section 23.0 Order of the Commission. (a) It appearing, that in compliance with paragraph (5) of section 20 of the Interstate Commerce Act, as amended by the Transportation Act, 1920, the Commission entered upon an investigation into and concerning dépreciation charges of common carriers subject to the Act; and a full investigation of the matters and things involved, in so far as they concern carriers by water, has been had, and the Commission, on the date hereof, has made and filed a report containing its findings of fact and conclusions thereon, which said report is hereby referred to and made a part hereof, 210 I.C.C. 259:

(b) (1) All carriers by water subject to the Interstate Commerce Act shall, effective January 1, 1939, institute depreciation accounting, as hereinafter prescribed, with respect to the following classes of common-carrier property, found in the accompanying report to be classes of property for which depreciation charges may properly be included under operating expenses:

Floating equipment:

Line equipment.

Harbor equipment.

Miscellaneous floating equipment.

*For statutory citation, see note to § 22.00-1.

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Terminal property:

Wharves, docks, and terminals.

Wharf equipment.

General and local office buildings.

Office equipment.

Shops, power plants, and miscellaneous structures.

(2) In the application of this order the terms "service life," "service value," "net salvage value," "straight-line method," "group method," "ledger value," "component rates," and "currently accruing depreciation" shall be construed in accordance with the definitions and explanations given therefor in the accompanying report, 210 I.C.C. 259.

(3) Depreciation accounting, as referred to in this order, shall

mean

(i) The charging to operating expenses and the crediting to a depreciation reserve during the service life of the property, as hereinafter provided, of amounts which will approximate the loss in service value not restored by current maintenance and incurred in connection with the consumption or prospective retirement of property in the course of service from causes against which the carrier is not protected by insurance, which are known to be in current operation, and whose effect can be forecast with a reasonable approach to accuracy.

(ii) The crediting of the ledger value of property at time of retirement to the appropriate primary real property and equipment accounts and the charging of the service value of such property when retired to the depreciation reserve, subject to the exceptions provided in subparagraph (8).

(4) The annual charges to operating expenses for currently accruing depreciation shall be computed, as hereinafter provided, at such percentage rate of the ledger value of the property in question that the service value may be distributed under the straight-line method in equal annual charges to operating expenses during the estimated service life of the property.

(5) All depreciation charges to operating expenses and concurrent credits to the depreciation reserve shall be made monthly in conformity with the group plan of accounting for depreciation, as explained in the accompanying report and as hereinafter provided, and in determining such monthly charges and credits the annual percentage rates shall be applied to the total ledger value (see subparagraph 10), as of the first of each month, of the respective primary accounts covering the classes of property hereinbefore specified and the result divided by 12; but that for corporate ledger and balance-sheet purposes the depreciation reserve shall be regarded and treated as a single composite reserve. Provided, That for purposes of analysis each carrier shall maintain subsidiary records in which the reserve is broken down into component parts corresponding to such primary accounts as include property hereinbefore found to be depreciable, showing in these records also in complete detail by such primary accounts the current credits and debits to the reserve; and that such detailed information shall be reported annually to the Commission,

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(6) In determining the monthly depreciation charges to operating expenses and the corresponding credits to the depreciation reserve a composite annual percentage rate shall be used for each of the primary accounts in the classification of expenditures for real property and equipment of carriers by water covering the classes of property hereinbefore specified; and that the composite rates so used shall be those which are from time to time prescribed by the Commission. Provided, That where the composite rate as prescribed has been developed by the application of component rates to the various subclasses of property within a primary account and a segregation of the property to which they are applicable is maintained or is available, such component rates, when authorized by the Commission, may be used in computing the current depreciation charges-so long as the property to which they apply is in service and the estimated service lives, and salvage values upon which they are based remain the same without a supplemental order, regardless of the fact that the amount of the various classes of property has so changed as to make possible the computation of a slightly different composite rate. Provided further, That, until such time as specific rates are prescribed by the Commission carriers by water shall develop and apply depreciation rates in conformity with the method outlined in this order (order, April 2, 1936).

(7) For the assistance of the Commission in prescribing the composite annual percentage rates to be effective beginning January 1, 1939, each operating carrier by water subject to the Act shall, not later than August 1, 1938, file with the Commission estimates of said percentage rates applicable to ledger values of the respective primary accounts covering the classes of property hereinbefore specified, owned and/or used by such company; such composite percentage rates shall be based upon estimated service values and service lines developed by a study of the company's history and experience and such engineering and other information as may be available with respect to future prospects, and shall produce a charge to operating expenses for the primary account, where more than one class of property is covered by the account, equal to the sum of the amounts that would otherwise be chargeable for each of the various classes; and such estimates shall be accompanied by a sworn statement showing the bases therefor and the methods employed in their computation.25

(8) Upon the retirement of a unit of depreciable property, whether or not the cause of the retirement is a recognized factor in depreciation, the service value shall be charged in its entirety to the depreciation reserve. Provided, That if the cause of the retirement is not a recognized factor in depreciation, but is a cause against which the carrier is insured, the amount recoverable from the insurance company or chargeable to an insurance reserve shall be first applied as an offset to the loss so covered and the remainder of the service value, if any, shall be charged to the depreciation reserve in accordance with the proviso to

Upon the submission by the companies of the data specified above temporary orders will be issued, specifying the composite annual percentage rates to be used, such orders to be subject to modification from time to time thereafter in accordance with the procedure indicated in finding (8) of 210 I.C.C. 259, 281, or as may otherwise be deemed necessary or desirable by the Commission.

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finding (2) 210 I.C.C. 259, 279, And provided further, That if the cause of the retirement is not a recognized factor in depreciation nor covered by insurance the carrier may, upon proof that the charge will result in undue depletion of the depreciation reserve and with the approval of the Commission, charge an appropriate part of the service value to profit and loss.

(9) In determining the amounts to be respectively credited to the primary real property and equipment accounts and charged to the material and supplies account and to the depreciation reserve in the case of the retirement of a unit of property, amounts for specific units shall be used so far as practicable; but that where this is impracticable because of the relatively large number and small size of the units, average amounts shall be used.

(10) As of January 1, 1939, each operating carrier by water shall establish and thereafter shall maintain records covering the cost of all carrier property owned and/or used for which depreciation accounting is herein prescribed; the manner in which such records shall be kept and the method of determining the amounts to be included therein as of January 1, 1939, and for subsequent property changes, shall be in accordance with finding (9) of 210 I.C.C. 259, 281; and the ledger value of carrier property used for depreciation purposes thereafter shall be the costs entering into the records so provided.

(11). With respect to common-carrier property used but not owned operating carriers by water shall include in operating expenses charges for depreciation upon the same basis as for owned property and shall maintain the same records of service lives, salvage, values, etc., as are required for owned property. Provided, That this shall not apply to units of property the depreciation of which is assumed by the lessor and the rent for which is included in operating expenses nor, with the approval of the Commission, to other units of property with respect to which it is shown that there are special circumstances and conditions justifying such exception.

(12) As of the effective date of this order each operating carrier by water shall make an estimate, in accordance with the principles set forth for the determination of currently accruing depreciation, of the amount of accrued depreciation in the depreciable property, such estimate to be broken down into component parts corresponding to the primary real property and equipment accounts in which are carried the classes of property for which depreciation accounting is herein prescribed, and shall enter the same in a record to be kept for future reference. Provided, That the amount so ascertained shall be subject to check and revision by the Commission and shall be treated as a tentative estimate until such time as it has been approved by the Commission.

(13) Each operating carrier by water shall keep a record of property retirements which shall reflect the service life and percentage of salvage value of each important class of property hereinbefore specified; shall maintain in convenient and accessible form engineering and other data bearing on prospective service lives and salvage values; and shall be prepared at any time upon direction by the Commission to

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