THE ACCOUNTING SYSTEM I: 
accounts of this classification at the time that the property is 
retired from service. The amount of this credit shall be charged 
concurrently as follows: 
“ An amount equal to the credit balance in the accrued depre- 
ciation balance-sheet account with respect to the property thus 
retired shall be charged to that account and the remainder 
(less salvage and insurance recovered, if any), together with the 
cost of demolishing the property, if demolished by or for the 
carrier, shall be charged to the accounts in Operating Expenses 
appropriate for the cost of repairs of the property before retire- 
ment. The accounting for the salvage shall be in accordance 
with the disposition made of the material recovered. 
“ If, however, the property retired and replaced with property 
of like purpose is of minor importance , such as a small roadway 
building or other small structure, and is replaced in kind with- 
out betterment, the cost of the replacement shall be charged to 
operating expense accounts, and no adjustment made in the road 
and equipment accounts. 
“If so authorized by the Interstate Commerce Commission, 
the carrier may charge to Profit and Loss any extraordinarily 
large item representing the cost of property retired and replaced, 
instead of charging such item to Operating Expenses. The 
carrier shall file with the Commission a statement of the cost 
and a description of the property retired and the reasons which, 
in its judgment, indicate the propriety of charging the cost of 
such property to Profit and Loss. 
“The provisions of this section are applicable in accounting 
(at the time of retirement) for the cost of property abandoned, 
even though the new property has been actually installed pre- 
viously to the date of the demolishment of the abandoned prop- 
erty. 
“ When the renewals to be made to an important building or 
other structure will constitute the major portion of its value 
when renewed, the property, when taken out of service, shall 
be considered as retired and accounted for as provided above, and 
for the purposes of this classification the renewed property shall 
be considered as an addition, and the appraised cost thereof 
shall be included in the accounts of this classification, considera- 
tion being given to the second-hand portions remaining therein. 
In no case shall the charge for the renewed property exceed the 
cost (at current market prices of labor and material) of new 
property of equal capacity and equal expectation of life in serv- 
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