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M r , K n ick erb o ck er: #8 2%y 10, 1932. fbll© we do not have a complete record of accruals of valuation sad iepreoietion in di ffereut or lode, we find on Jan* oarj l, 1924 the book valm of osr water system was #16,609.86. during that year, under dork Order Vf*12, we renewed end enlarged adotit half of our system in Olerk* s Los Vegas Sowuelte, total cost, v20,542.76, and charged Investment Accounts with #3,540.80, the bslaoee of expenditure being charged to 0.3*, go on December 31, 1924, valuation was ft«s as #20,060.74. Accrued depreciation at the eeroe time was #16,274.71 which amount had been accrued prior to ^eoember 1920. She charge of #17,001.87 to O.H. wag based on auditor s letter of ilovember 16, 1923, file 0*301. In 1926 we renewed practically all of the rest of the water lines is Gl&rk* g Las Vegas iownelte and a charge was made to o.s. under dork Order V?«31 of #17,698.28. On December 31 1920, General lialance Sheet shows a ledger value to the water eyet© - of #20,050.74. it seep- to me that it it self evident tnst after the expenditure of #38,141*03 renewing and enlarging the old water system, that the book value of the syeters at the clogs of this work should represent the actual value instead of the amount sho«n on the General balance sheet. Sfaeee accounts should be capitalised for two reasons; (X; This Company is entitled to earn a profit on all investments, and unless the**# amounts are properly shown in t e imreetaent ec- aoonte, it is practically impossible to Justify an earning os it. (2) *he full value of t. © property should be established for the purpose of accruing funds for retirement. Otherwise when the full book value has 'been retired, the amount accrued for retire* meat will net be sufficient to caver the cost-of replacement• If you concur in my views, will you please refer the ' matter to At• d&rry, in order that he stay take the necessary steps to correct our General Accounts. lour© truly, m co - Mr* 3* L* Haugh« f§§mrwrinim^r~~~~~ Vie© President end Agent.