Evening star. [volume] (Washington, D.C.) 1854-1972, 1936-02-23
BUS MERGER 0. K.
DEPENDENT UPON
BOOK PROCEDURE
Accounting for Depreciation
Reserve Declared of
Vital Importance.
NEED FOR REPLACING
BUSES SOON is SEEN
Possibilities of Future Reductions
in Bus and Street Car Fares
Also Tied In.
BY DON S. WARREN.


Approval by the Public Utilities
Commission of proposed purchase of
the Washington Rapid Transit Co.
by the Capital Transit Co. will de-
pend to a large degree on how the
latter firm plans TO account on its
books for the merger, District officials
indicated yesterday.
Of vital Importance to the public
Is the question of accounting for the
depreciation reserves built up in past
years out of passenger revenues for
replacement of many buses which
soon must be retired, it was explained
at the commission.
The present purchase plan contains
no statement of how this would be
handled. The principal question in
volved is whether the riding public
might be required for second time
to pay for bus requirements, if the
merger Is approved, it was said.
Replacement Held Necessary.
Engineers testified at last week S
hearings that most of the present w,
r. T. buses must be replaced within
q few years.
Possibilities of future costs in bus
and street car fares are directly re-
lated to these accounting procedures,
officials explained. They seek to pre-
vent any accounting methods which
would adversely affect the situation
through enlargement of operating
expenses.
There will be no reduction In fares
on the Sixteenth street bus lines as
a part of the proposed merger plan.
The commission, however, already has
announced it will hold special hear
ing later on proposed greater uni
formity in fares.
The commission is withholding
Judgment on the proposal of the street
car company to pay $539, 1923 for the
w r. T.-S212,370 for the stock and
S327,253 for note held by the North
American Co., the utility holding cor
poration which has financial control
over both firms.
Note Retirement in IL Years.
The price paid for the w. r. T.
would not be charged to operating
expenses Of the street car firm, Off
Gals explained, but would come out
of company surplus. The note is to
be retired over II years. There would
be down payment of s27,253 and
thereafter 10 equal annual payments
OF 100000.
1t is expected the commission will
consider proposing 10 installment
payments for the stock, if it sees fit
to approve the merger plan. The pur-
pose would be to prevent depletion of
the funds of the Capital Transit Co.
to an extent which might affect it's
major business.
If merger is effected there would
be added to the rate base of the
street car concern an amount repre-
senting the value of the physical
properties acquired through the stock
transaction
Appraisals of the value of the w.
r. T. at the hearings varied widely.
In support of tie proposed purchase
price company witness, Edward
Roberts of New York, said the value
was $623,665.
Net Worth Put at $300,246.
Byars NICK. 3achman, commission
chief accountant, figured the net
worth from an accounting study at
$300,246. Fred A. Sager, commission
chief engineer, placed the reproduc-
ton value. less depreciation, at $685.
1886. Henry j. Saunders, commission
consultant, said no purchaser would
be justified in paying more than
$4,000
When the commission asked j. E.
Heberle, vice president of the Capital
Transit Co., to submit an accounting
plan for the proposed merger, it also
asked that similar studies be made
by Human d. Folsom, commission
counsel, and Bachman.
Decision of the commission on the
whole plan is expected within two
weeks. ..|