it, the amount of such charges shall be appropriately credited by the lessor to its equipment repair accounts and charged by the lessee to the corresponding accounts.

543 Miscellaneous Rents.

This account shall include rents payable accrued on property held by the accounting company under lease or other agreement and not properly chargeable to any of the foregoing accounts.

NOTE A: This account shall not include rents provided for in the operating expense accounts.

NOTE B: If property, the rent of which is chargeable to this account, is sublet to others the rent from the sublease shall be credited to the appropriate rent income account depending on the classification of the property as transportation or nontransportation in the same manner as property owned by the carrier.

NOTE C: Payments for the exclusive use of miscellaneous property maintained by the lessor and used by the accounting company shall be divided into two portions: One, representing the cost of maintenance, shall be charged to the appropriate operating accounts, and the other, representing rent (amount applicable to the investment in the property), shall be charged to this account. The bill rendered by the creditor shall show the distribution of the payments as between maintenance and rent, and such distribution shall be adhered to by the debtor.

544 Miscellaneous Tax Accruals.

This account shall include all accruals for taxes not provided for elsewhere, such as taxes on securities owned, taxes on income from securities owned, and taxes on miscellaneous nonoperating physical property the cost of which is includible in balance-sheet account 737, "Miscellaneous physical property."

NOTE: Taxes upon miscellaneous operating property shall be charged to account 535, "Taxes on miscellaneous operating property.” 545 Separately Operated Properties; Loss.

(a) This account shall include amounts payable under the terms of agreements or contracts whereby the deficit resulting from the operation by others of properties of other companies having a separate corporate existence is to be paid, in whole or in part, by the accounting company.

(b) In determining the amount payable by the accounting company, consideration shall be given not only to the operating revenues and operating ex

penses, but also to other items of income or deductions which affect that amount.

NOTE A: The amount receivable by the operating company shall be credited by it to account 518, "Contributions from other companies."

NOTE B: Dividends or other returns upon securities issued by separately operated companies and held or controlled by the accounting company shall not be included in this account to offset a deficit payable, but in accounts 513, "Dividend income"; or 514, "Interest income," as may be appropriate. 546 Interest on Funded Debt.

This account shall include the current accruals of interest on all classes of longterm debt, the principal of which is includible in accounts 765, "Funded debt unmatured"; 766, "Equipment obligations"; 767, "Receivers' and trustees' securities"; 768, "Debt in default”; and 769 "Amounts payable to affiliated companies." This account shall be kept in such form that the interest on receivers' and trustees' securities, and on other classes of funded debt may be shown separately in the annual report to the Commission.

NOTE A: This account shall not include charges for interest on funded debt obligations issued or assumed by the accounting company and owned by it, whether pledged as collateral or held in its treasury, in special deposits. or in sinking or other reserve funds.

NOTE B: When funded debt is incurred for new lines or extensions, or for addition and betterment purposes, the accruals of interest on such funded debt (less interest received on unexpended balances), to the date of completion or coming into service of the property so acquired shall be included in the road and equipment accounts.

NOTE C: This account shall be maintained so as to show separately: (a) fixed interest which will be paid, or for which provision for payment will be made, when the interest matures; (b) interest in default; and (c) contingent interest determined to be payable.

547 Interest on Unfunded Debt.

This account shall include interest accrued on unfunded debt, such as shortterm notes payable on demand or having dates of maturity one year or less from dates of issue, and open accounts including discount and expense on demand and short-term loans, interest on receipts outstanding for installments paid on capital stock, interest on deferred payments for public improvements, and other analogous items. The discount on short-term notes, if of a considerable

amount shall be distributed through equal monthly charges, over the term of the notes.

NOTE: When short-term notes or other evidences of unfunded indebtedness are issued for new lines or extensions or for addition and betterment purposes the accrual of interest to the date of completion or coming into service of the property shall be included in the road and equipment accounts.

548 Amortization of Discount on Funded Debt.

(a) This account shall be charged during each fiscal period with the proportion of the discount and expense on funded debt obligations applicable to that period. This proportion shall be determined according to a rule the uniform application of which through the interval between the date of sale and the date of maturity will extinguish the discount and expense on funded debt.

(b) The charge to this account for any period must not be either greater or less than the proportion of the balance remaining unamortized applicable to that period so long as any portion of the discount and expense remains unextinguished, except that if the total discount and expense applicable to any particular issue of securities does not exceed $25,000, the entire amount may be charged to this account at time of issue. 549 Maintenance of Investment Organi

zation.

This account shall include the directly assignable administration expenses of the accounting company which are incident to its investments in leased or nonoperating physical property, and in stocks, bonds, or other securities.

ITEMS OF EXPENSE

Advertising annual reports (lessor companies only).

Calls for bonds in accordance with sinking fund provisions of mortgages.

Directors' fees.

Printing and mailing dividend checks. Publishing and mailing annual reports and other corporate statements to shareholders. Publishing notices of declaration of dividends.

Law expenses.

Office expenses.

Salaries of officers, clerks, and attendants.
Stationery and printing.

NOTE: Administration expenses incident to railway operation are includible in the primary accounts provided for in operating expense general account 450, "General."

550

Income Transferred to Other Companies.

(a) This account shall include the whole or any portion of the income of the accounting company payable to another company under the terms of agreements or contracts without obligation for reimbursement.

(b) In determining the amount payable by the accounting company, consideration shall be given not only to operating revenues and operating expenses, but also to other items of income or deduction which affect that amount.

NOTE A: The amount receivable by the other company shall be credited by it to account 512, "Separately operated propertiesProfit."

NOTE B: Dividends or other payments upon securities issued or assumed by the accounting company shall not be included in this account.

551 Miscellaneous Income Charges.

(a) This account shall include items, not provided for elsewhere, properly chargeable to income account during the current year. Among the items which shall be included in this account are:

Interest on tax deficiencies, on overcharge claims, and on court awards.

Income tax upon the interest on the accounting company's funded debt when these taxes are assumed by the company.

Payments of old accounts previously written off.

Penalties and fines for violation of the Interstate Commerce Act or other Federal and State laws when not specifically provided for elsewhere.

Loss on sale of securities carried as temporary cash investments.

Loss on sale of land used for transportation purposes, and of noncarrier property.

Loss on sale of securities acquired for investment purposes, and charges to write down the ledger value of such securities because of impairment in their value.

Loss from company bonds reacquired.

(b) When the loss on the sale of land, noncarrier property, or investment securities other than temporary cash investments, or on the reacquisition of the company's own bonds is of an amount sufficiently large to constitute an extraordinary item, pursuant to instruction 12(d), such loss shall be included in account 570 "Extraordinary items". Extraordinary and Prior Period Items 570 Extraordinary items (net).

(a) This account shall include extraordinary items accounted for during the current accounting year in accordance

with the text of instruction 1-2(d), upon approval by the Commission. Among the items which shall be included in this account are:

Net gain or loss on sale of land used for transportation purposes, and of noncarrier property.

Net gain or loss on sale of securities acquired for investment purposes, and charges to write down the ledger value of such securities because of impairment of value.

Net gain or loss on reacquisition of company bonds.

Loss on sale or retirement of transportation property, for which depreciation reserve has not been provided.

Changes in application of accounting principles.

(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 590 "Federal income taxes on extraordinary and prior period items".

580 Prior period items (net).

(a) This account shall include unusual delayed items accounted for during the current accounting year in accordance with the text of instruction 1-2(d), upon approval of the Commission. Among the items which shall be included in this account are:

Unusual adjustments, refunds or assessments of Federal income taxes of prior years. Unusual adjustments of reserves of prior years determined to be excessive or deficient.

Similar items representing transactions of prior years which are not identifiable with or do not result from business operations of the current year.

(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 590 "Federal income taxes on extraordinary and prior period items".

590 Federal income taxes on extraordinary and prior period items. This account shall include the estimated Federal income tax consequences (debit or credit) assignable to the aggregate of items of both taxable income and deductions from taxable income which, for accounting purposes, are classified as unusual and extraordinary, and are

602 Credit Balance Transferred from Income.

This account shall show the net credit balance brought forward from the income account for the calendar year.

606 Other credits to retained income.

This account shall include other credit adjustments, net of assigned Federal income taxes, not provided for elsewhere in this system but only after such inclusion has been authorized by the Commission.

Debit

611 Debit Balance (at Beginning of Calendar Year).

This account shall include the net debit balance in the retained income account at the beginning of the calendar year.

612 Debit Balance Transferred from Income.

This account shall show the net debit balance brought forward from the income account for the calendar year. 616 Other Debits to Retained Income.

(a) This account shall include losses from resale of reacquired capital stock, and charges which reduce or writeoff discount on capital stock issued by the company, but only to the extent that such charges exceed credit balances in capital surplus for shares reacquired. See instruction 6-4.

(b) This account shall also include other debit adjustments, net of assigned Federal income taxes, not provided for elsewhere in this system but only after such inclusion has been authorized by the Commission.

620 Appropriations for Sinking and Other Reserve Funds.

This account shall be charged and account 797, "Retained income-Appropriated," shall be credited with amounts appropriated pursuant to provisions of reorganization plans, mortgages, deeds of trust, or other contracts requiring payments into sinking funds, capital funds, and other funds.

This account shall be charged with the amount of dividends declared on actually outstanding capital stock issued or assumed by the company. If the dividend is not payable in cash, the securities or other property to be distributed shall be described with sufficient particularity to identify the distribution. The account shall be subdivided to show separately the dividends declared on the various subclasses of capital stock.

NOTE: This account shall not include charges for dividends on capital stock issued or assumed by the company and owned by it, whether pledged as collateral or held in its treasury, in special deposits, or in sinking or other reserve funds.

GENERAL BALANCE SHEET ACCOUNTS

(a) This account shall include money, checks, sight drafts, and sight bills of exchange in the hands of the accounting company's financial officers and agents, or in transit from its agents and conductors for which such agents and conductors have received credit. It shall include, also, deposits with banks and trust companies available for use on demand, and savings accounts subject to the usual clause reserving the right to defer payment for a specified number of days.

(b) The amount of checks and drafts, which have been transmitted to payees and which remain unpaid at the close of the accounting period, shall be credited to this account. When the amount of such checks and drafts cannot be determined with absolute accuracy, an estimate of the amount shall be used. 702 Temporary Cash Investments.

This account shall include the cost of securities and other collectible obligations acquired for the purpose of tem

porarily investing cash, such as United States Treasury certificates, marketable securities, time drafts receivable, demand loans, time loans, time deposits with banks and trust companies, and other similar investments of a temporary character.

703 Special Deposits.

This account shall include funds specifically deposited for the payment of dividends, interest, and other current liabilities; also other deposits subject to current withdrawal for specific purposes only.

NOTE: Deposits available for general com-pany purposes shall be included in account 701, "Cash."

704

Loans and Notes Receivable.

This account shall include the book value of all collectible obligations in the form of demand or time loans and notes receivable, or other similar evidences (except interest coupons) of money receivable within a time not exceeding one year from date of issue.

NOTE A: Obligations held as investments which mature more than one year after date of issue shall be included in accounts 721, "Investments in affiliated companies"; or 722, "Other investments," as may be appropriate.

NOTE B: Loans and notes receivable acquired for the purpose of temporarily investing cash shall be included in account 702, "Temporary cash investments."

705 Traffic and Car-Service BalancesDr.

This account shall include the net of the balances receivable from or payable to other companies in the accounts representing interline freight, passenger, and baggage revenues, and charges for equipment interchanged on a per diem or a mileage basis, when such balances result in a net debit.

NOTE A: When the net of the balances is a credit, it shall be included in account 752, "Traffic and car-service balances-Cr."

NOTE B: The amount to be entered in this account in the carrier's annual report to the Commission shall be stated in accordance with the text of this account. For convenience in accounting the carrier may maintain currently separate subaccounts under the following captions:

705 and 752 (a) Interline freight, balance. 705 and 752(b) Interline passenger, balance.

705 and 752(c) Interline baggage, balance. 705 and 752(d) Equipment interchange, balance.