1969-1970 — Page 13

ACCOUNTS

27. The accounts for the year ended 31st March, 1970 have been reconstructed to provide a more realistic reflection of current conditions. Under the 'Double Account' system previously in use no provision for depreciation was made but the cost of replacement of fixed assets was charged against revenue in the year of purchase. This system has now been abandoned and it will be seen that depreciation is now provided in respect of all fixed assets.

28. The value of the K.C.R. staff quarters at King's Park-previously written off on acquisition as a replacement-has been brought back to the balance sheet at cost whilst, at the same time, many old buildings have been included at a nominal value.

29. In recent years, the annual report has included, under this section, a note to the effect that land occupied by the railway appeared in the balance sheet at a figure well below market value and that no charge for its use was reflected in the railway accounts. The reprovision- ing of the railway workshops at Sha Tin raises a number of problems with regard to the treatment in the accounts of the land occupied and further problems will arise when the terminus is resited. To overcome them land has been excluded from the balance sheet and an annual rent charge has been included. Together these changes will give a truer financial picture of the Railway's operations.

30. A more conventional approach has been adopted in the presenta- tion of accumulated funds in the balance sheet and the item 'Renewals Fund for Plant and Rolling Stock' now appears as depreciation against the appropriate items under Fixed Assets.

31. The introduction of a Treasury Current Account under Current Assets arises from the accounting changes mentioned above and in particular the inclusion of the accounts required to link the accrual accounting system needed for commercial accounts with the Govern- ment cost accounting system.

32. The principal increases in Fixed Assets consist of the reprovision- ing of the Railway Workshops at Sha Tin and ancillary works at a cost of $5,798,100, the construction of a new Running Shed in Hung Hom ($628,145) and the provision of additional plant and equipment for the Workshops ($362,366). Various improvements of the existing

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