tax consequences, in accordance with the text of instruction 4, upon approval by the Commission.

[40 FR 53260, Nov. 17, 1975]

Extraordinary Items and Accounting
Changes

435 Extraordinary items (net).

(a) This account shall include extraordinary items accounted for during the current accounting year in accordance with the text of instruction 4, upon submission of a letter from the carrier's independent accountants, approving or otherwise commenting on the item and upon approval by the Commission.

(b) This account shall be maintained in a manner sufficient to identify the nature and gross amount of each debit and credit.

(c) Federal income tax consequences of charges and credits to this account shall be recorded in account 450, "Income Taxes on Extraordinary Items," or account 451, "Provision for Deferred Taxes Extraordinary Items." [40 FR 53260, Nov. 17, 1975]

450 Income taxes on extraordinary items.

This account shall include the estimated income tax consequences (debit or credit) assignable to the agregate of items of both taxable income and deductions from taxable income which for accounting purposes are classified as extraordinary, and are recorded in account 435, "Extraordinary items (Net)," The tax effect of any timing differences caused by recognizing an item in the account provided for extraordinary items in different periods in determining accounting income and taxable income shall be included in accounts 451, "Provision for deferred taxes-Extraordinary items."

[40 FR 53260, Nov. 17, 1975]

The company's proportion of refunds and payments on account of errors in routing and billing.

The proportion of uncollected charges on lost, damaged, or destroyed shipments borne by the company and the company's proportion of refunds of revenue of such shipments.

NOTE: Amounts accrued payable to carriers subject to part I, II, or III of the Interstate Commerce Act or to others for the line haul transportation of the freight, for pick-up and delivery service, and for terminal transfer service, shall be charged to the accounts provided for the purchase of transportation.

TRANSPORTATION PURCHASED; DEBIT 510 Transportation purchased; debit.

The primary revenue accounts provided under this general account represent reductions of gross forwarder revenues as recorded in general account 1, in recognition of the fact that freight forwarders do not transport the shipments for which tariff charges are assessed. The primary accounts segregate such reductions according to the type of common carrier which provides the transportation service.

If a car, truck, barge, or other vehicle is jointly loaded by more than one forwarder, the forwarder which pays for transporting such jointly loaded shipment, or for pickup, delivery, or transfer services in connection therewith, shall charge to the appropriate primary account in this group only that part of the total payment which relates to its share of the joint load. The forwarder or forwarders participating in the joint loading and in the transportation services purchased for it shall charge their respective part or parts of the payment therefor to the same primary account or accounts charged by the forwarder making the payment.

511 Railroad transportation.

This account shall include amounts paid or accrued to railroad companies for the transportation of forwarder freight.

512 Motor transportation.

This account shall include amounts paid or accrued to motor companies for the transportation of forwarder freight. 513

Water transportation.

This account shall include amounts paid or accrued to carriers by water for the transportation of forwarder freight.

514 Pick-up, delivery, and transfer service.

This account shall include amounts paid or accrued to others for the collection and delivery of forwarder freight, including allowances to shippers, when such services are performed within a terminal.

It shall also include amounts paid or accrued to others for transferring freight between stations in a terminal.

515 Other transportation purchased.

This account shall include amounts paid or accrued to others for transportation of forwarder freight in line haul service not provided for in the foregoing operating revenue accounts.

INCIDENTAL REVENUE

521 Storage; freight.

This account shall include revenue from the storage of freight. 522 Rent revenue.

This account shall include amounts accrued as rents receivable from the use by others of transportation property. 523 Miscellaneous.

This account shall include revenues not provided for elsewhere such as those accrued for services rendered in connection with the clearance of cargoes including payment of duty, consular fees, and customs entry; for handling, marking, and weighing freight; as fees for handling C.O.D.'s; and as commissions on insurance.

NOTE A: Where the company merely acts as broker or intermediary, the amounts paid to others for providing these services shall be charged to this account.

NOTE B: Amounts collected from other freight forwarders (co-loaders) in reimbursement for cost of loading or unloading freight shall not be credited to this account but shall be applied as a reduction in the cost of such service.

OPERATING EXPENSE INSTRUCTIONS 81 Purpose of operating-expense ac

counts.

items (see instruction 3 Unaudited items) such as charges for loss and damage, injuries to persons, and other expenses upon an accrual basis.

83 Injuries and damages.

In order that the probable liability for losses not recoverable through insurance, such as loss and damage to freight and injuries to persons, may be shown currently, the company may record in the appropriate casualty accounts estimates of such liabilities with concurrent credits to account 222, "Other reserves." Credits for this purpose shall not be made in excess of a reasonable provision against such losses. When the liability is admitted by the company, either voluntarily or because of the decision of a court or other lawful authority such as workmen's compensation board, the admitted liability shall be charged to the reserve and credited to the appropriate liability account.

OPERATING EXPENSE ACCOUNTS

601 General office salaries.

This account shall include:

(a) Salaries of officers. The pay of officers and their assistants who are engaged in the general administration or management of the company or its affairs in a territorial subdivision, including salaries and fees of receivers and trustees and commissions paid in lieu of salaries; also the pay of officers whose duties are of such general character that they cannot specifically be charged to account 602, "Traffic department salaries," or to account 603, "Law department salaries."

(b) Salaries of clerks and attendants. The pay of clerks and attendants in offices of officers whose pay is chargeable to this account.

602 Traffic department salaries.

This account shall include:

(a) Salaries of officers, managers and solicitors. The pay of officers and their assistants directly in charge of or engaged in supervising and directing the solicitation and procurement of traffic and the preparation and distribution of tariffs governing such traffic; the pay of station managers; the pay of general, commercial, city, district and other agents engaged exclusively in canvassing and soliciting traffic; and the pay of traveling agents and solicitors.

and foremen.

(b) Superintendents The pay of superintendents, assistant superintendents, foremen and assistant foremen in charge of or engaged in the operation of stations.

(c) Station and warehouse labor. The pay of laborers engaged in the handling of freight, including truckers, stevedores, checkers, delivery clerks, receiving clerks, and all other freight handlers.

605 Loading and unloading by others.

This account shall include amounts paid or payable to others for loading and unloading freight.

606 Operating rents.

This account shall include rents paid or payable for the use of land, structures, and other property (including tabulating machines).

607 Traveling and other personal ex

penses.

This account shall include:

(a) Traveling expenses of officials and other employees including mileage or other allowances for maintenance and operation of automobiles owned by employees.

(b) Expense accounts paid to solicitors and others.

(c) Membership fees and dues in traffic clubs and other business associations, where such memberships are held in the name of the employee.

608 Communications.

This account shall include amounts paid or payable for all communication

90-024-76-50

This account shall include amounts paid or payable for printing tariffs and schedules, and for the purchase of tariffs issued by carriers other than forwarders. 612 Loss and damage; freight.

This account shall include:

(a) (1) Amounts paid for loss, damage, delay or destruction of freight shipments not recoverable from insurance or from others.

(2) Pay and expenses of others than employees engaged as adjusters and in detecting thefts.

(3) Pay and expenses of others than employees while engaged as witnesses in connection with loss and damage cases.

(4) Amounts paid others for repacking and boxing damaged merchandise.

(b) To this account shall be credited amounts received from the sale of refused, unclaimed, and damaged freight.

(c) This account may be charged monthly with an amount estimated to be sufficient to meet the probable liability incurred for freight claims; concurrent credit being made to account 222, “Other reserves." (See instruction 83 Injuries and damages.)

NOTE A: Expenses not otherwise provided for in connection with conduct of suits, shall be charged to account 613, "Law expenses," but the amount of the final judgments, including plaintiffs' court costs, shall be charged to this account.

NOTE B: Interest for delay in payment of loss and damage claims, shall be included in account 421, "Other interst deductions."

613 Advertising.

This account shall include expenses, other than salaries, in connection with advertising for the purpose of securing traffic, such as the preparation, printing,

This account shall include the cost of maintaining property used in forwarder operations, such as furniture, fixtures, motor equipment, buildings, and heating, lighting and water equipment.

NOTE: The accounting for retirements and replacements is prescribed in instruction 42 Basis of charges, and Instruction 43 Retirements.

616 Depreciation and amortization.

This account shall include the amount of charges applicable to the accounting period for the depreciation of property, and for the amortization of improvements on leased property. (See instruction 5 Depreciation and amortization accounting.)

617 Insurance.

This account shall include premiums for insuring the carrier against loss through injuries to persons or damage to or destruction or loss of property, whether caused by fire, accident, or other cause; also premiums on fidelity bonds of employee.

This account shall also include amounts estimated to settle claims by others for the classes of risks cited above which are not covered by commercial insurance and which are not provided for elsewhere. The carrier shall not accrue amounts to cover risk of loss or damage to its property from fire, theft, or similar loss contingencies.

NOTE.-Amounts charged to this account for estimated risk shall be credited to account 220, "Insurance reserves."

(49 U.S.C. 12, 20, 304, 913) [41 FR 32601, Aug. 4, 1976]

618 Pay roll taxes.

This account shall include old-age benefit, unemployment compensation, Social Security, Railroad Retirement and other taxes that are computed on the basis of the pay rolls.

619 Commissions and brokerage.

This account shall include:

(a) Amounts paid or payable as commission and brokerage to others for securing traffic and fees paid outside agents engaged exclusively in canvassing and soliciting traffic.

(b) Amounts paid or payable as commissions for managerial or similar services.

620 Vehicle operation.

This account shall include the cost of operating the company's own vehicles used in connection with forwarder services.

NOTE: The cost of maintaining such vehlcles and depreciation thereof shall be included in accounts 615, "Maintenance," and 616, "Depreciation and amortization," respectively.

621 Law expenses.

This account shall include:

(a) The fees and retainers for services of attorneys not regular employees of the company.

(b) Cost of law books, printing briefs, legal forms, testimony, reports, etc.

(c) Cost of suits and payment of special fees, not otherwise provided for, fees paid arbitrators for settlement of disputed questions; and all law and court expenses not provided for else where.

622 Depreciation adjustment.

This account shall include the difference between the amount of depreciation accrued and credited to account 149, "Deperciation and amortization reserveTransportation property," with respect to any unit or item of depreciable property accounted for as retired from service, and the service value of such unit or item. (See instruction 5 Depreciation and amortization accounting.)

direct relation to the protection of the property of the company, the development of its business, or the welfare of its employees.

Contributions toward funds or other provisions for the relief of employees.

Corporate and fiscal notices of general character.

Donations to local Fire Departments, Y.M. C.A. and similar institutions.

Election of Directors, cost of.

Exchange, domestic, on checks cashed or deposited or on drafts bought.

Fees and expenses paid directors.

Loss by fire or burglary of funds in custody of officers or employees or from defalcation of officers or employees when not recoverable from insurance.

Loss from acceptance of counterfeit money. Notices of dividends declared.

Pensions or gratuities paid out of company's funds to retired employees or the heirs of former employees.

Premiums on policies under which employees are insured and they or their heirs are the beneficiaries.

Stockholders meetings, cost of.

Specific general costs for prevention of accidents.

Supplies used in the operation of station platforms and the preparation of cars for loading, such as wooden pallets, lumber for bracing, steel strapping, hammers, saws, and

nails.

NOTE: Stationery and office supplies shall be included in account 610.

PARTS 1220-1239-PRESERVATION OF RECORDS

SPECIAL NOTE: Section 20(7)(b) of the Interstate Commerce Act includes the following provision:

Any person who shall knowingly and willfully make, cause to be made, or participate in the making of, any false entry in any annual or other report required under this section to be filled, or in the accounts of any book of accounts or in any records or memoranda kept by a carrier, or required under this section to be kept by a lessor or other person, or who shall knowingly and willfully destroy, mutilate, alter, or by any other means or device falsify the record of any such accounts, records, or memoranda, • • • shall be deemed guilty of a misdemeanor and shall be subject, upon conviction in any court of the United States of competent jurisdiction to a fine of not more than five thousand dollars or imprisonment for not more than two years, or both such fine and imprisonment: Provided, That the Commission may in its discretion issue orders specifying such operating, accounting, or financial papers, records, books, blanks, tickets, stubs, correspondence, or documents of such carriers, lessors, or other persons as may, after a reasonable time, be destroyed, and prescribing the length of time the same shall be preserved.