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INTERSTATE COMMERCE COMMISSION
DIVISION OF VALUATION
INSTRUCTIONS
TO ACCOUNTANTS.
RELATING TO THE MANNER
OF RECORDING DATA IN CONNECTION WITH
THE FINANCIAL HISTORY OF
COMMON CARRIERS
JANUARY, 1915
WASHINGTON
GOVERNMENT PRINTING OFFICE
1915
CONTENTS.
Page.
General instructions 5
Comparative general balance sheet, Form No. 148 6
Comparative income account, Form No. 149 6
Stocks issued or retired, Form No. 150 7
Funded debt issued, etc., Form No. 151 8
Notes issued, etc., Form No. 152 8
Stocks acquired, etc., Form No. 153 9
Bonds acquired, etc., Form No. 154 9
Notes of individuals and companies, etc., Form No. 155 9
Source of resources and application, Form No. 156 10
81645—15 (3)
GENERAL INSTRUCTIONS.
In order that uniformity may obtain in the work performed by the
accounting forces of the Division of Valuation under section 19a of
the act to regulate commerce as amended, the standardized forms
and procedures hereinafter described have been designed. It is
requested that each accountant familiarize himself with the forms
and the manner of their preparation.
A reference character or symbol conforming to the following plan
shall be assigned to each sheet used. The exhibit reference shall
indicate the corporation, and all data relating to a particular cor¬
poration shall be given the same exhibit reference. The characters
or symbols to be used for exhibits are the single letters of the alphabet
from A to Z until they shall have been exhausted, then the double
letters from AA to ZZ, etc. The schedule reference is printed on the
form, and is indicative of the form itself; thus, the balance sheet is
Schedule No. 1, the income account Schedule No. 2, etc. If more
than one sheet of the same kind be required to record the transac¬
tions of a given class, page numbers shall be assigned to the several
sheets. In preparing Forms Nos. 150 and 151 a separate sheet must
be used for each class of securities recorded, and subschedule numbers
should be assigned to such sheets. To illustrate the plan: Assume
that the XYZ railroad, whose property is being inventoried, consists
of the construction of new lines and a merger of the M. & N. and
S. & T. Railroads, and that the S. & T. Railroad prior to the merger
had issued general mortgage bonds, refunding bonds, and debenture
bonds, the recording of which required one sheet, two sheets, and
four sheets, respectively. The exhibit symbols to be assigned to the
M. & N., the S. & T., and X. Y. Z railroads would be A, B, and C,
respectively. The full references to the several bond issues above
mentioned would be—
General
mortgage
bonds.
Refunding
bonds.
Debenture
bonds.
Exhibit
B
5
1
1
B
5
2
1-2
B
5
3
1-4
Schedule
Subschedule
Page
All entries representative of assets or debits should be shown in
black ink, and all entries representative of liabilities or credits should
(5)
6
be shown in red ink. In each blank space at the top of the vertical
columns on Forms Nos. 148, 149, and 156 the year to which the data in
the columns relate should be shown. Both details and totals should be
shown in the same column. It is not intended that details be shown
in one column and totals in the column to the right, nor is it in¬
tended that increases and decreases be shown. All schedules should
be compiled in accordance with the carrier's records. Any exceptions
taken by the accountants should be stated on exception sheets in a
form that will permit an adjustment of the carrier's accounts to be
made therefrom.
The accounts should be stated by the fiscal years observed by the
carrier, which, in some instances, do not end June 30. The remarks
column should be used in every case to describe transactions which
need a further explanation to effect a clear understanding thereof.
All schedules bearing the same exhibit reference should upon com¬
pletion be bound as a single unit.
D. V. Form No. 148. Comparative general balance sheet. -
All entries on this form shall be taken from the trial balance of the
company's general ledger unless a balance sheet of the carrier is
available and conforms in total to the balance sheet accounts on the
trial balance. The classification shown hereon, which differs slightly
from that prescribed by the issue of 1914, shall be observed in so
far as it is practicable to do so. If the carrier's accounts have not
been kept in a manner to permit such a classification it is not in¬
tended that they shall be analyzed and restated. An arbitrary dis¬
position of some items will therefore have to be made.
The accounts Nos. 728-729 shall be included in the subtotal of the
section in which they appear, and also in the total of the asset side.
Accounts Nos. 751 and 755 shall show the book liability; that is, they
shall include the securities represented by accounts Nos. 728-729.
References to data in support of the several items stated on the
balance sheet should be shown in the column headed " Analysis in
schedule number."
D. V. Form No. 149. Comparative income account.
In preparing the income account it is desired that the classification
prescribed by the issue of 1914 shall he observed in so far as it is
practicable to do so. If the carrier's accounts have not been kept in
a manner to permit such a classification it is not intended that they
shall be analyzed and restated except to the extent necessary to
reasonably conform to the classification in its more essential features.
The revenues and expenses for the period prior to tho 15 years
immediately preceding the date of valuation shall bo stated in total
7
by years. No classification of them is required. For the 15 years
immediately preceding the date of valuation the revenues and ex¬
penses should be classified as provided for by the form.
Profit and loss account.
No form has been prescribed for recording the transactions to be
found in the profit and loss account. Due to the varied character of
the greater number of the entries therein it is believed that the infor¬
mation can best be displayed on blank schedules. The charges and
credits to this account should be shown in black and red, respectively,
and should be in sufficient detail to convey a correct understanding
of the transaction. The blanks used for this purpose should bear
the appropriate exhibit reference and should be given Schedule No. 3.
D. V. Form No. 150. Stocks issued or retired.
A separate sheet should be used for each class of stock issued, and a
subschedule number should be assigned to each such class. The
statement of facts should be by the fiscal periods observed by the
carrier. The credit items shown by the ledger accounts for a year
should be recorded first, and the information relating thereto should
be displayed in the appropriate columns, the entries being in red.
The debit items for the same period should immediately follow in
black. A line should be ruled under the last debit item and the net
balance in the "Par value" column should be shown in the appropri¬
ate color. Balances need not be carried down each year in the "Con¬
sideration" columns. The credits and charges for the succeeding
years, down to the date as of which the property is inventoried,
should be shown in like manner. If there were no transactions for a
year or more, it is not necessary to bring the balance forward from,
year to year; that is, fiscal periods during which there were no changes
need not be shown. On the bottom fine of the sheet the net total of
each column under "Consideration" should be shown in the appro¬
priate color, and if more than one sheet be required for a particular
stock issue the net total above mentioned should be forwarded to the
succeeding sheet. On completion of the data regarding the several
issues, if there be more than one, a recapitulation should be made.
This should show with respect to each issue the name thereof, which
may be entered in the "Date issued or retired" and "To whom
issued" columns, the total number of shares and total par value out¬
standing, and the consideration received for each issue. The balance
of par value outstanding should agree with the balance sheet as at the
date of the inventory. The "Remarks" column shall be used to
state such facts in connection with a transaction involving the issue
or retirement of securities as cannot be plainly stated by figures in
8
the "Consideration" column. For the purposes of this statement
stocks represented by balance sheet accounts Nos. 728-729 shall be
entered 011 this form in the "Liability for treasury stock" column,
and the amount of securities so acquired should be shown as an asset
in the "Treasury stock" column on Form No. 153. Where expendi¬
tures for commissions, syndicating, banking, etc., are incurred in con¬
nection with an issue of securities and paid with a portion of such issue,
the details should be stated in the "Other" column under "Consider¬
ation," showing each such item separately, and explaining the facts of
the transaction in the "Remarks" column. Where payments are
made by cash or other value, appropriate notation to fully describe
such transactions shall be made in the column headed "Remarks."
D. V. Form Xo. 151. Funded debt issued, assumed, or retired.
The instructions under "D. Y. Form No. 150, Stocks issued or
retired," apply also to this form.
D. V. Form No. 152. Notes issued, assumed, or retired.
The facts regarding the above obligations should be stated by fiscal
periods, and notes of all classes may be recorded on the same sheet.
All notes except equipment trust notes and issues similar thereto
issued or assumed (which shall be recorded as funded debt) during
a fiscal year should be recorded first, and all related information should
be displayed in the appropriate columns, the entries being in red. If
there are a number of small notes they may be stated in total as
"Miscellaneous." Notes retired during the year and the balance out¬
standing should be stated in a manner similar to that described under
"Form No. 150, Stocks issued or retired," except that the aggregate
only of such retirements and not an itemized statement thereof should
be shown. When a note is retired the date of such retirement should
be entered in the "Date retired" column on the same line upon which
the issue of the note was recorded. A distribution of the balance at
the date of valuation shall be made under "Consideration." Expen¬
ditures for commissions, syndicating, banking, etc., incurred by
reason of such issues, should be recorded in accordance with instruc¬
tions under D. V. Form No. 150.
For the period prior to the 15 years immediately preceding the
date of valuation, the total only of notes issued and of notes retired
shall be recorded by years, and the distribution of such totals shall
be made in the appropriate columns under "Consideration." In addi¬
tion thereto show the number of notes issued and the dates covering
the first and last issues. Exceptions to this rule should be made if
a company has a limited number of notes involving largo amounts
which have an important bearing upon its financial dealings. All
9
issues subsequent to the 15-year period mentioned should be recorded
in accordance with the instructions contained in the preceding para¬
graph.
D. V. Form No. 153. Stocks acquired, held, or disposed of.
A record of all transactions in stock acquired, including the com¬
pany's own issues held in its treasury, should be made upon this
form. A separate sheet should be used for each class of each cor¬
porate stock dealt in. The general procedures set forth under
"D. V. Form No. 150, Stocks issued or retired," including the re¬
capitulation, apply to this form, except that the acquisitions for the
year should be stated first and dispositions should follow. Stock
represented by balance sheet accounts Nos. 728-729 should be shown
as an acquisition, and the par value thereof should be shown in
the u Treasury stock" column under " Consideration." All adjust¬
ments in book values, and profits or losses upon sale or disposi¬
tion of stock, including the company's own issues, shall be entered
in the "Profit and loss" column. The difference between the par
value of the latter named issues and the proceeds from their sale is
premium or discount, but for the purposes of this statement such
items shall be stated in the "Profit and loss" column. Expendi¬
tures for commissions, syndicating, banking, etc., incurred in con¬
nection with the acquisition, sale, or exchange of treasury or invest¬
ment securities should be recorded in accordance with instructions
under D. V. Form No. 150.
D. V. Form No. 154. Bonds acquired, held, or disposed of.
The instructions under UD. V. Form No. 153, Stock acquired,
held, or disposed of," apply also to this form.
D. V. Form No. 155. Notes of individuals and companies acquired,
held, or disposed of.
The facts regarding transactions in the " Notes of individuals and
companies" should be stated by fiscal periods, and notes of all
classes other than equipment trust notes and corresponding issues
shall be recorded on the same sheet. All notes acquired during a
fiscal period should be recorded first, and all information relating
thereto should be displayed in the appropriate columns, the entries
being in black. If there are a number of small notes relatively
unimportant, they may be stated in total as " Miscellaneous." Notes
disposed of during the year and the balance outstanding should be
stated in a manner similar to that described under "Form No. 150,
Stocks issued or retired," except that the aggregate cost of such
retirements and not an itemized statement thereof should be shown.
10
A distribution of the balance at the date of valuation shall be made
under " Consideration." Instructions that relate to the issuance of
notes for the period prior to the 15 years immediately preceding the
date of valuation, and recorded under the caption UD. V. Form
No. 152/' shall be observed in scheduling the record of notes of
individuals and companies acquired, etc.
D. V. Form No. 156. Source of resources and application.
The purpose of this form is to reflect in a general way the financial
changes of a corporate company from year to year, and is to show in
gross the results portrayed net by the balance sheet and income
accounts. Gross charges or credits should be shown, except in such
instances where the word " Net" appears in the item column. In such
cases the net balance should be shown opposite the title of the account
on the appropriate sheet. The aggregate of the net balances of all
current assets or liabilities not specifically provided for should be
shown opposite the items other current assets or other current liabil¬
ities, except that relatively important items which would not be prop¬
erly described by any of the accounts on the form should be stated
separately in the appropriate group to which they belong, a similar
proceeding being observed in the case of deferred assets or deferred
liabilities. Items covering expenditures for commissions or other
payments to syndicates, banks, or banking in connection with the
acquisition or disposition of securities, shall be stated separately on
one of the blank lines, all such entries being supported with a detail
schedule of the amounts recorded.
Entries on this form must be made from the accounts or schedules
of accounts and not from the trial balance or balance sheets except
in cases where items are stated in net amounts. Items erroneously
classified in the accounts of a carrier which have not been adjusted
in accordance with the facts of the transaction that they profess to
represent, shall be correctly stated on this form. For example, dis¬
count on securities issued, or capital stock or other securities issued
as a bonus and which stand charged to the property investment
account, should be stated opposite the appropriate item under invest¬
ment in fixed property. Expenditures for property charged to oper¬
ating expenses, income, or accounts other than capital, shall, when so
determined, be correctly stated on this form. Securities issued to
refund other issues which do not result in a net increase in the lia¬
bilities of a carrier shall be stated on both sides, so as to show the
complete financial changes of the company.
D. E. Brown,
Supervisor of Accounts.
o