New-York tribune., 1910-10-07
WESTERN UNION REPORT
Auditing Committee Reduces
Statement of Co.'s Surplus.
AL PROPERTY VALUED
Accounting System To Be Re-
modelled as Result Of Defects
That Are Revealed.

Sooa after the purchase, last November
ev the American Telephone and Telegraph
GERMANY Of a large interest in the western
7-nion telegraph Company. amounting Vlrt-
rally 70 control measures were taken to
ascertain the exact condition OF the prop
or+v no audit Of the books having been
made for several years 4 special auditing
.,,-r-,,f+tae Of three directors was appointed,
consisting OF < J Hall. who is vice-presi-
dent of the American Telephone and Tele-
.--anb COMPANY. Jacob H SchiH and Henry
a. Bishop.
The committees report on the property
and business OF the company, with which Is
Incorporated q report TO IL by Price wafer
1,o75sa & CO. chartered accountants recon-
r7eu5inE. among other things adjustments
IN The surplus account requiring reo eliO'i'
aSgrecating 81, ,73l.14S was sueTnllleo yes
-erdsv 10 the executive committee py "iiio1i
= was apuroved and ordered sent 10 IA
stockholders.
70 make z complete Investigation ana Ieloi
the facts REGARDLESS OF what results hllsl-'
he shown, have been engaged on tielr uasH
&C. e,rht months Under authorization
-, t1,e snecisl committee they retained
ss engineering assistants Westinghouse
--,-,r Kerr & Co, 70 value the physical
property.
--.l-i,r M first the item OF property ac-
,-,-. he accountants say that the cost or
.al.,-a,b lines. equipment. etc. as shown
-, he hooks. is sl35.573. .7o7. The valuation
"a. .,-, -F7e engineers was S126, ,4l2,Sos. anu
t,-r,,7i-,1 e1pendirures for uncoTnpleted con-
..-i-+io- work in progress on June 81 IaSl'
she total valuation was SlZl.sISslA' exclusive
r real estate. The difference between the
toolz and appraised value totals the &C
,.,.,--arts have adjusted by q charge OF
s. 5.5q5.0s9 against surplus
The valuation. Il IS noted, has been 1lade
IN the basis Of replacement cost Win NJ
account taken Of depreciation but tne a.
roz-ance which might have been made for
tepreciation .las been regarded a. or1sel Dy
he omission 10 state valuation OF 'He
cornnanyss organization rs going concern
TIE -enort includes in the property &C
,-,,,7+ -1,e entire property of merged COM
-,sries. but sets Up liability Of S5SJo'1-o'
-,-.sa,,+i,,r The uar value Of the capital
,..,, - these compauies which is in the
hands Of the public. The book value OF the
ro-7nsuzIs real estate is S5,oSS,lg- ouI lhe 4
valuation fixed by the appraisers Is S5'SJe'+ +4o 1
The value Of the company's patents mas 4
teen written down 10 the relatively small 4
amount OF s102.I0S. arrived at by computing 4
-Fe rroDo-tion of TIE cost OF the eNlSli1S 4
-,1ateuts renreseuted by their UneIDired life I
= addition te the S5-525,1s9 reduction IN I
yhe book value Of telegraph INES ana
l,,,,--,er- r. the estimated appraisal value 4
-1e report shows the following ADJUST
-,ar-s in +Fa surplus account: Liability 10 4
The Gold and Stock Telegraph Company IN /
respect Of proceeds Of sales Of securities 4
,--io- a lime 60 1poe. urderstated in the I
.,s1s,ca sheet Of that date, S3.[9.S74- loss /
on -evaluation os investments. Sl.7CS,5i6, the
forlr values having been adjusted 10 mar 4
La- -7-ices- reserves required on June 80, !
rqaa for bad and doubtful accounts, etc,
and for accrued Liabilities, Sl,105.6oi; reserve 4
created for depreciation Of submarine 1
cables TO date 100000, and reserve for 1
CONTINGENCIES. $4,000. a total OF $l3.73l-l43.
U4ductinr this amount from the Sl8s67.-
sse surplus shown on June 80. z909, and ad- 4
ding the s15s-.S7l balance 10 credit Of proft
and loss for the year ended June 30. 1910, 4
the surplus Of the company as OF the latter
date is shown as s7,7S3.6s2. The total assets /
and liabilities Of the company On June 90 /
last were Sl72.56S O9o.
The accountants also submit an income |
account for the fiscal year ended June 30. /
-glo, showing total earnings Of $22754.111- /
From this total are deducted operating ex-
penseE. including rent Of leased lines, re- 4
construction. repairs, etc, s., 754 405, and /
taxes. Ss49 SOS. leaving q balance Of S51S9,- /
SIS. Adding s. IS5. .092 income frCm loans and |
investments, the net profits were s1274s00-
Deducttng interest and dividend payments. /
amounting 10 Ss.s77.525 IN all, the surplus /
for the year was s1597.37A
The report makes reference tc the seri- /
oIs defects" in the accounting orEaniZa- I
-io1 OF the company, which II says are I
ueIng reInedied in accordance with the 1
recoT1mendatious Of the chartered account /
ants. a more detailed report dealing with 4
some OF the important features Of the in /
vestig igat3on is in preparation.