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anticipated life is the amount which should be credited to the
Renewals Fund. It is necessary, therefore, to determine as
closely as possible the original cost of all wasting assets and
to estimate their respective lives in order that the annual
contribution to a Renewals Fund can be determined.
4.
Since no proper Renewals Fund has existed in the past,
it will be necessary to estimate the amount of the accumulated
From the present average age of rails, sleepers,
arrears.
rolling stock etc. it is possible to determine approximately
what amount would at present stand to the credit of a Renewals
Fund, if such a Fund had been established when the railway
was first opened.
5.
When a Renewals Fund has been established it should
be credited annually with the amount which represents the average
annual cost of replacing wasting assets and debited with the
actual cost of renewals carried out each year and the balance
of the account at the end of the year whether, plus or minus,
is the proper charge against the net receipts.
6.
We attach a copy of Statement No. 13 from the Annual
Report of the Nigerian Railway for the financial year ended
31st March, 1937, which shows the estimated replacement cost of various assets on that railway and the annual contribution which is
made to the Renewals Fund. The table shows the average
percentage contribution for each type of asset, based upon its
anticipated life. It will be seen that the average percentage
rate is 3.15.
7.
On the Kenya & Uganda Railways contributions on account of depreciation are paid into the Renewals Fund at the rate of 2
based of the value of the railway wasting assets and at varying rates -
on the estimated lives-for other wasting assets. For the year ended
31st December, 1936, the contribution based upon 24 of renewal cost was £319,004. for railway services, whereas the annual
/contribution
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