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s shown as item 4, col.(3), on the attached statement is due to the forme? including depreciation seemed only since January 1, 1943 when X.C.C. depreciation accounting be* came effective, whereas the BIB depreciation is not only accrued at different rates, but also Includes an element representing depreciation of 30% of the value of the property at January 1, 1943 for past accrued depreciation, this element of 30# was agreed to with BIB at the time 1PIB Co. changed from retirement to depreciation accounting for Income tax purposes. The gross book investment of the LVL&W Co. facilities Is the same ss that used for income tax purposes and the depre­ciation and amortisation figure is within #6,335.98 of being the same. In regard to the final paragraph of Mr. Rouse's let* t e n If LVL&W Co. property, other than the las Vegas water facilities, is ultimately transferred to other eompanies, 1 concur in the suggestion that an Inventory thereof bo taken in order to definitely determine that the property recorded on the books is presently in existence. This inventory can readily be taken by conforming the procedure to that which was followed when Inventorying Utah Barks Company facilities in 1948 prepare* tory to executing its new contract with United mm* States Severn* In connection with this subject, under date of July 19, 1942 Hr. Ashby advised Hr. Hulsizer that on that date the transfer of LA&SLRR Co. water facilities to LVL£W Co. was dls* cussed at Los Angeles with Messrs. Charske, Strong, Bennett, and Mann, following which the conclusion was reached that any change in the existing status was not Justifiable at that time. With respect to Mr. Rouse’s letter of October 20, 1952s There would be no objection from an accounting standpoint, nor disadvantage from a federal income tax standpoint, if the L&&SL acquired the LTLStiN property, other than the Lae Vegas water sys­tem, at book cost, instead of the Union Land Company. • 6 - Enel B. M. SUTTOR RMS