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and are here excluded, and certain other lands, with acquisition expenses of $114.63, which have been excluded as not owned. Certain parcels, with no acquisition expenses, omitted from the Cincinnati Southern Railway's report, have been added.

The report of the Cincinnati Southern Railway upon the cost of its lands shows that certain lands were acquired by it through deeds that recite merely nominal considerations, and certain lands for which no considerations are named in instruments. Since the records do not indicate that any actual payment was made in the acquisition of these lands, they are herein designated as apparent aids.

LEASED RAILWAY PROPERTY

The entire property of the Cincinnati Southern Railway is leased to the Cincinnati, New Orleans & Texas Pacific for a term of 85 years from October 12, 1881.

It was operated by the Cincinnati, New Orleans & Texas Pacific from October 12, 1881, to December 31, 1917, under lease agreement. From January 1, 1918, to date of valuation the common-carrier property of the Cincinnati Southern Railway has been operated by the United States Railroad Administration as the system of the Cincinnati, New Orleans & Texas Pacific. Details with respect to the operation of this property are given in the chapter on leased railway property in the report on the Cincinnati, New Orleans & Texas Pacific.

GENERAL BALANCE SHEET STATEMENT

The general balance sheet statement of the Cincinnati Southern Railway, as of date of valuation, follows:

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Long-term debt, funded debt unmatured....

Deferred liabilities, other deferred liabilities.

Corporate surplus, funded debt retired through income and surplus_____

Total.....

Predecessor Companies,

17, 982, 000. 00 539, 355. 81

3, 368, 000. 00

21, 889, 355. 81

CINCINNATI, LEXINGTON AND EAST TENNESSEE RAILROAD COMPANY-PREDECESSOR OF THE CINCINNATI SOUTHERN RAILWAY, FORMERLY NAMED THE LEXINGTON AND SOUTHERN KENTUCKY RAILROAD COMPANY

No accounting records of the Cincinnati, Lexington and East Tennessee Railroad Company were obtained. Therefore, no information can be given from its accounts regarding its financial dealings, corporate operations, or investments. The records reviewed do not indicate that the company was controlled by any individual or corporation on December 11, 1873, the date of sale, nor, on the other hand, whether it controlled any other common-carrier corporations The

property of the company was operated by the Kentucky Central Railroad Company under lease agreement from the date the company acquired possession of its property, March 20, 1860, to the date of sale. The railroad owned by the company consisted of 13 miles of single-track, steam railroad, extending from Short Street in Lexington to the south suburbs of Nicholasville, all in the State of Kentucky, all of which, had been acquired by purchase after foreclosure from the Lexington and Danville Railroad Company.

LEXINGTON AND DANVILLE RAILROAD COMPANY-PREDECESSOR OF THE CINCINNATI, LEXINGTON AND EAST TENNESSEE RAILROAD COMPANY

No accounting records of the Lexington and Danville Railroad Company were obtained. Therefore, no information can be given from its accounts regarding its financial dealings, corporate operations, or investments. The records reviewed do not indicate that the company was controlled by any individual or corporation on November 18, 1858, the date of sale, nor, on the other hand, whether it controlled any other common-carrier corporations. The property of the company was operated by the Kentucky Central Railroad Company under lease agreement from the date of completion in 1856 to the date of sale. The railroad owned by the Lexington and Danville Railroad Company consisted of 13 miles of single-track, steam railroad, extending from Short Street in Lexington to the south suburbs of Nicholasville, all in the State of Kentucky, all of which had been acquired by construction. The records reviewed do not indicate whether the road was constructed under contract or by company forces. Further details with respect to the construction of this property are given in the chapter on development of fixed physical property in the report on the Cincinnati Southern Railway.

37 Val. Rep.

INDEX DIGEST

[Numbers in parentheses following citations indicate pages on which subjects are considered]
ACCOUNTS AND ACCOUNTING.

Amount representing the cost of acquiring the Gadsden & Attalla Railroad
Company, by the Alabama Great Southern, was properly excluded from
the carrier's restated investment account, as it did not represent the
investment of the carrier in the property. The consideration given by
the carrier for this property was the right of joint use by the Alabama
Great Southern of the carrier's tracks and those formerly owned by the
Gadsden & Attalla. Southern Ry. Co., 1 (6-7).
Expenditures made by the carrier in obtaining an equity in the property
of the Charlottesville & Rapidan Railroad Company were properly includ-
ible in its investments in road and equipment account, such equity being
measured by the outlay made to retire bonds issued to meet cost of con-
structing road, but the amount representing the par value for unretired
bonds was properly excluded from the investment account. Id. (8).
Amounts representing profits realized by carriers from the sale to builders,
who were constructing equipment for them, of standard specialties pur-
chased from manufacturers, should not be considered either as investment
in equipment or as a part of the original cost. Id. (9).

Original cost to date is the actual cost to a carrier of property at the time of
its initial dedication to public use. This may be the cost to a predecessor
of the reporting carrier or it may be the cost of the property acquired by
the reporting carrier from a noncarrier and then dedicated to public use.
Id. (10).

Under present classification of accounts, amounts representing losses resulting
from a reduction in the book value of investments in securities of other
companies were properly charged to profit and loss and not to investment
in road and equipment. Id. (11).

Expenditures for additions and betterments to machinery and equipment.
could not be determined since comparisons of the unit in its present
condition with the original specifications under which it was purchased did
not present a sound basis for the determination thereof. Id. (15).
Discount on bonds issued to reacquire bonds previously issued in part pay-
ment for property did not represent any part of the true investment in the
property acquired and should not be included in the investment account
Id. (18-19).

A rule under the accounting classification provides that the investment
accounts shall be charged with the estimated values at time of acquisition
of right of way and other road and equipment property donated to the
carrier, except that unless authorized by the commission no charges shall
be made to these accounts for donations received prior to the date this
rule became effective. Propriety of the amount claimed as value of prop-
erty donated and charged, without authorization, was not established.
Id. (19).

ACCOUNTS AND ACCOUNTING-Continued.

Amount described as interest on funded debt, prior and subsequent to the
construction period, inseparable, originally charged to the income account,
transferred to debit of the investment in road and equipment account
with offsetting credit to profit and loss, was properly deducted from the
investment account as not all of this amount would be includible in this
account, and the evidence was not sufficient to estimate the amount that
should be included. Id. (20).

The accounting classification of investment in road and equipment provides
that when any interest-bearing debt is incurred in construction, the
interest accruing on the part of the debt representing the cost of property
chargeable to road and equipment accounts after the funds become
available for use and before the receipt or the completion or coming into
service of the property acquired shall be charged to this account. Id. (20).
As it can not be determined what part, if any, of the proceeds from the sale
of the bonds and notes issued in connection with funded debt was included
in the recorded money outlay for construction, restoration of the amount
representing discount on funded debt to the investment in road and equip-
ment account was not warranted. Id. (20-21).

The accounting classification provided that the investment account should
include only such proportion of the discount and expense on funded debt
as was equitably assignable to the period between the date of actual issu-
ance of securities and the time when the property acquired, or the improve-
ment made, becomes available for the service for which it was intended.
Id. (21).

ADDITIONS AND BETTERMENTS. See COST OF REPRODUCTIONS NEW
(ADDITIONS AND BETTERMENTS).

ADVERSE POSSESSION.

only under the presumption that
Southern Ry. Co. 1 (58).

Rights by prescription can be asserted
there has been a prior grant or deed.
Although the right of way parallel to and adjoining the tracks of the carrier
has been occupied and used for more than 40 years by the Charleston &
Western Carolina Ry. Co., there was nothing to show that the possession
initiated under the lease was not continued permissively, or that its
predecessor in interest lost title to the leased area by adverse possession.
Therefore, this parcel should be inventoried as owned but not used by the
carrier. Id. (60).

AGREEMENTS. See CONTRACTS AND AGREEMENTS.

AIDS, GIFTS, GRANTS, AND DONATIONS.

A rule under the accounting classification provides that the investment
accounts shall be charged with the estimated values at time of acquisition
of right of way and other road and equipment property donated to the car-
rier, except that unless authorized by the commission no charges shall be
made to these accounts for donations received prior to the date this rule
became effective. Southern Ry. Co., 1 (19).

ALLEYS. See STREETS, ALLEYS, AND HIGHWAYS.
ANALYSIS OF METHODS.

The commission has approved a method for pricing locomotives which is
based on a consideration of their original cost, with consideration also
of changes in prices between the time of acquisition and the pricing
period, and the cost of similar locomotives to other carriers. To consider
only the builder's contract price would be to disregard what the complete
locomotives in fact cost, due to the discounts and rebates received by the
purchaser on the specialties. Southern Ry. Co., 1 (36).

BALLAST. See COST OF REPRODUCTION NEW (BALLAST).
BORROW PITS.

Although tracts used as borrow pits on original construction would be prop-
erly classified as carrier property, the carrier's witness was without definite
information as to the use of the parcel. Therefore, it was properly
classified as noncarrier. Southern Ry. Co., 1 (55).

BRIDGES, TRESTLES, AND CULVERTS. See CoST OF REPRODUCTION
NEW (Bridges, Trestles, and Culverts).

BUILDINGS AND STRUCTURES. See COST OF REPRODUCTION NEW
(BUILDINGS AND STRUCTURES).

CASH IN HAND. See WORKING CAPITAL.

CHARTER RIGHTS.

Areas of rights of way owned and used by the carrier under charter grants
and deeds to their predecessors were included in the tentative valuation to
the extent that they were actually occupied by tracks, structures, cuts,
or fills, or used for other common-carrier purposes. Southern Ry. Co.,
1 (55-58).

A railroad constructed on a charter right of way acquires not a title to the
land, but an easement. Id. (56).

In the States involved, a railroad company is entitled to an easement over
100 feet on each side of the center of its track for right of way under its
charter provisions and the right to occupy any portion of this right of way
at any time that railroad purposes require it. Until necessity arises for
its use, the excess over the width actually occupied and used for railroad
purposes may be occupied and used by the owner of the adjoining land.
Id. (56-57).

Perpetual easements where used for carrier purposes are inventoried as equiv-
alent to ownership. If, however, the limits of the easement, in terms of
metes and bounds, include areas not so used the rights under the charter
to use such excess areas as necessity arises are deemed to have no measur-
able value and should be excluded from the valuation. Id. (58).
CONTRACTS AND AGREEMENTS.

Following 75 I. C. C. 17, land supporting industrial tracks used by virtue of
defeasible agreements were properly excluded from the tentative valua-
tion. 1 (58).

In most instances contracts between industries and carriers involving the
use of lands for industrial tracks serving the grantor industries are defeasi-
ble agreements. Consequently, it would be inconsistent in cases of indus-
try tracks, where carriers are unable to produce muniments of title, to
indulge the presumption of a grant or deed. Areas supporting industrial
tracks which have been acquired by the carrier by prescription or by deeds
which have been lost should not be included in the tentative valuation.
Id. (58-59).

CONTRIBUTIONS.

In inventorying structures where there has been a separation of grades, the
reproduction estimate includes the cost of the bridge and such other con-
struction as is so intimately associated therewith that it would have to be
reproduced if the bridge were to be reconstructed. Other work required
of the carrier incident to the separation of the grades, but not included in
the bridge or approaches, is considered to be an expense attached to its
continued occupancy of the crossing and is reported as a right in public
domain, with value equal to the original cost. In each case where the
public contributed toward the cost of the construction an appropriate
deduction is made. Southern Ry. Co., 1 (32).

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