ALL COMMUNICATIONS
TO BE ADDRESSED TO THE
CROWN AGENTS FOR THE COLONIES.
THE FOLLOWING REFERENCE AND THE
DATE OF THIS LETTER BEING QUOTED.
Z/E.261/14.
TELEGRAMS: "CROWN. LONDON'.
TELEPHONE:
ABBEY 7730,
ENCLOSURES.
CROWN
AGENTS
FOR
THE
COLONIES
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14
4, MILLBANK,
LONDON, S.W.1.
25th August, 1938.
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Sir,
C.O. REGI
I have the honour to acknowledge the receipt of your letter No.53932/38 of the 12th August, transmitting copy of a
Despatch dated 7th June from the Governor of Hong Kong regarding
the question of the provision of a Renewals Fund for the Kowloon-
Canton Railway, together with a note prepared in the Colonial
Office on the matter.
We agree that it is desirable that a Renewals Fund
In the absence of such a Fund a
should be established.
considerable sum may be needed for railway replacements at a
time when it may be inconvenient to provide it. Further, it
should not be overlooked that in the case of a railway the
expenses incurred in any one year on permanent way, bridge and
rolling stock renewals, rarely represent the reduction in value
due to wear and tear-of the railway equipment in that year and
the nett receipts are not, in consequence, a correct basis for
judging if the railway has been profitable or not. In order
that the annual Balance Sheet may show correctly the results of
the year's operations, it is necessary to include in it on the
debit side a sum to cover the average annual cost of renewing
wasting assets.
3.
In order to determine the amount which should be
credited to the Renewals Fund annually it is necessary to
ascertain the original cost of all wasting assets and to
estimate their anticipated life. The original cost-less
salvage value when an asset is replaced-divided by the
/anticipated
The Under Secretary of State,
COLONIAL OFFICE.
CA
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