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Accrued depreciation, equipment..........

Accrued depreciation, miscellaneous physical property ---
Other unadjusted credits...

Total....

Corporate surplus:

Additions to property through income and surplus___
Appropriated surplus not specifically invested...

Total appropriated surplus--

Profit and loss, credit balance_-_

Total corporate surplus__.

Grand total..

5, 455, 000. 00

1, 471, 503. 17 6, 150, 180. 05 719, 561. 36 2,818, 680. 65 40, 773. 80

56, 502. 00 1, 572, 760. 05 203, 404. 12 1, 470, 638. 10

19, 959, 003. 30

633, 341. 60

1,051, 619. 99 1, 133, 469. 42 3, 448, 332. 39 15, 472, 168. 77

81, 819. 37 2, 151, 600. 96

23, 339, 010. 90

790, 020. 62 60, 211. 81

850, 232. 43 28, 327, 953. 81

29, 178, 186. 24

498, 076, 910. 20

Lessor Companies

ELBERTON SOUTHERN

INTRODUCTORY

The Elberton Southern is a corporation of the State of Georgia, having its principal office at Atlanta, Ga. It is controlled by the Atlanta and Charlotte Air Line, through ownership of 51 per cent of the outstanding capital stock. The Southern owns the remaining 49 per cent of the outstanding capital stock and all of the outstanding bonds of the Elberton Southern and holds a perpetual lease of the property of the Atlanta and Charlotte Air Line. From the date of

its organization December 2, 1908, to December 31, 1908, the property of the Elberton Southern was operated by that company. Since January 1, 1909, it has been operated solely by the Southern by virtue of its ownership of securities supplemented by a lease from the Elberton Southern dated January 1, 1909. Because of its close relation with the Southern, accounting records were not maintained by the Elberton Southern after June 30, 1909. Reports have been rendered to this commission subsequent to that date, which reflect income debits and credits of equal amounts representing income from lease of road and interest on funded debt.

CORPORATE HISTORY

The Elberton Southern was incorporated December 2, 1908, under the general laws of the State of Georgia through filing articles of incorporation with the secretary of state. The purpose of incorporation was to acquire the road and other assets of the Elberton Air Line Railroad Company, the charter of which company had expired under the law. The date of organization of the Elberton Southern was December 2, 1908.

DEVELOPMENT OF FIXED PHYSICAL PROPERTY

The road owned by the Elberton Southern, extending from Elberton to a connection with the road of the Atlanta and Charlotte Air Line was conveyed to the Elberton Southern on December 2, 1908, by the purchaser of the Elberton Air Line Railroad Company. It was constructed as a narrow-gage line by the Elberton Air Line Railroad Company and opened for operation in December, 1878, and was broadened to standard gage by that company in 1895.

HISTORY OF CORPORATE FINANCING

The records of the Elberton Southern do not disclose any syndicating arrangements. At incorporation, the company issued securities in the par value of $450,000 in payment for the railroad and other assets of the Elberton Air Line Railroad Company.

The securities issued were as follows:

Capital stock common..

First-mortgage 5 per cent 50-year gold bonds______

$200, 000
250,000

These securities were outstanding on the date of valuation and represented the total amount of securities authorized and issued by the Elberton Southern. The stock was issued in shares of $100 each. The par value of the capital stock and bonds issued by the Elberton Southern in the reorganization of the Elberton Air Line Railroad Company were $103,600 in excess of the par value of the securities the reorganized company had outstanding at the date of reorganization as shown by the following tabulation:

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RESULTS OF CORPORATE OPERATIONS

The results of corporate operations, as shown in the income and profit and loss accounts of the Elberton Southern are given below.

Income statement—A condensed summary of the income accounts for the year ended with date of valuation and for the two periods, December 3 to December 31, 1908, and January 1, 1909, to date of valuation, during the first of which the property was operated by the Elberton Southern and during the last by the Southern, follows:

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Disposition of net income, income credit balance transferred to profit

and loss....

$15, 532. 20 8, 492. 32

7,039. 88 120. 68

6, 919. 20

1, 245. 54

8. 164. 74

1, 479. 14 974. 46

2, 453. 60

5, 711. 14

5, 711. 14

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Profit and loss statement.—A condensed summary of the profit and loss accounts on date of valuation, follows:

Credits:

Profit and loss credit balance of the Elberton Air Line Railroad
Company at the date of its demise transferred to the books of

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Under the present accounting rules of the commission the profit and loss credit balance of the Elberton Air Line Railroad Company at the date of its demise in the amount of $266,288.86, transferred to the profit and loss account of the Elberton Southern is includible in the investment in road and equipment account

of the Elberton Southern. If the accounts were adjusted as indicated above, there would be a debit balance of $266,288.86 in the profit and loss account as of the date of valuation.

INVESTMENT IN ROAD AND EQUIPMENT

The investment of the Elberton Southern in road, including land, no equipment being owned, on date of valuation is stated in its books as $450,000.

At incorporation, the Elberton Southern issued $200,000 par value capital stock and $250,000 par value first-mortgage bonds in payment for the property and other assets of the Elberton Air Line Railroad Company. The investment in road and equipment account was charged with an amount equal to the par value of the securities; and the other assets acquired from the Elberton Air Line Railroad Company were offset by contra credit to the profit and loss account in the amount of $266,288.86.

Under the present accounting rules of the commission the amount of $266,288.86 which the Elberton Southern credited to its profit and loss account is includible in the investment in road and equipment account. If this adjustment were made the debit balance in the investment in road and equipment account on the date of valuation would be reduced to $183,711.14.

This balance in the investment in road and equipment account, as so far adjusted, as shown above, would comprise the following classes of considerations: Outlay in securities:

Capital stock issued, common, par value.---
First-mortgage bonds issued, par value.....

$200, 000
250,000

$450, 000. 00

From which should be deducted the recorded value of assets other than road and equipment, taken over in the acquirement of property..

266, 288. 86

The above may include some or all of the unknown costs of noncarrier lands and some or all of the unknown costs of portions assignable to noncarrier uses of land that is used partly for carrier and partly for noncarrier purposes, as the Elberton Southern has made no charges for such lands to the miscellaneous physical property account. The costs of the above lands at time of dedication to public use, so far as they are indicated by accounting records, are stated in the chapter on original cost to date.

ORIGINAL COST TO DATE

The original cost to date of the road and equipment, including land, owned by Elberton Southern and used for common-carrier purposes, has not been ascertained. The Elberton Air Line Railroad Company, which constructed the entire road, recorded investment in road and equipment at the date of its demise amounting to $346,400 which included securities of $346,362 par value, issued for unknown considerations. The only outlay of the Elberton Air Line Railroad Company which can be identified as an item of original cost is recorded money outlay for additions and betterments of $38.

The Elberton Air Line Railroad Company charged to its profit and loss account items aggregating $114,004.78 purporting to be for additions and betterments to road. Since it is not possible, solely from an analysis of the accounts, to determine whether such charges represent the cost of additional property still in existence on the date of valuation and do not represent renewals or replacements, in whole or in part of property charged to the investment in road and equipment

account and not written out, the amounts have not been included in the above summary. On the other hand, it has not been determined whether there should be deductions for property retired.

The Southern records money outlay in the amount of $150,929.30 made by it for miscellaneous additions and betterments to the property of the Elberton Southern, which it charged to improvements on leased railway property account. The above-mentioned outlays may include some or all of the unknown costs of noncarrier lands, and some or all of the unknown portions assignable to noncarrier uses of land that is used partly for carrier and partly for noncarrier purposes, as the Elberton Southern has made no charge for such lands to the miscellaneous physical property account. The costs of the above lands at time of dedication to public use, so far as they are indicated by accounting records, are stated in the section devoted to cost of lands in the chapter on original cost to date.

In addition, the Southern has presented a statement showing that it has made net expenditures in the amount of $838.67 subsequent to the date of valuation on improvements to the property of the Elberton Southern, which improvements were inventoried as being in common-carrier use on date of valuation. amount has not been verified by the Bureau of Valuation.

This

Cost of lands.-The Elberton Southern reports amounts aggregating $4,523.40 as the outlays by it in connection with lands, including noncarrier lands. A verification of the amounts indicates that the costs should be stated as $6,085.90, due to the addition of $3,000 omitted costs and the transfer of lands, with costs of $87.50, to the report of the Southern, and the exclusion of $350 nominal considerations reported for lands donated.

The returns include certain lands classified as carrier, noncarrier, and partly carrier and partly noncarrier donated, certain lands for which merely nominal deed considerations are reported, certain lands for which no considerations are shown in the investment of title, and certain lands for which no reference to evidence of title was reported.

The amounts reported as costs for the remaining lands and rights owned, after making the changes noted above, are made up in part of costs supported by accounting records, and in part of substantial considerations named in deeds which the Elberton Southern returned as costs but which are not supported by accounting records. These amounts and the proceeds from parts of parcels sold, both classified according to the classification herein of the lands or rights to which they apply, are summarized as follows:

Classification

Lands classified as carrier, owned, but leased to the Southern..
Lands classified as noncarrier, owned....

Rights in private lands classified as carrier, owned but leased to the Southern.

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MISCELLANEOUS PHYSICAL PROPERTY

The accounts of the Elberton Southern do not record a balance in the miscellaneous physical property account on the date of valuation. However, certain parcels and parts of parcels of lands owned by the Elberton Southern have been classified herein as noncarrier lands. A summary of the costs of these lands, as reported by the Elberton Southern, is stated in the chapter on original cost to date. The amount that would be includible in the miscellaneous physical

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