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inventories shown therein vere compared, with those of the Union Pacific. In most cases, both Inventories exactly agreed Inasmuch as the original valuation by J. M. Montgomery & Co., Inc. was based on inventories fur­nished by Union Pacific engineers. However, the quantities so furnished vere checked for accuracy, Insofar as possible, by field Investigations and studies of available plans and maps of the various system facilities. The Union Pacific engineers, at the beginning of discussions, strongly favored an appraisal based on reproduction cost under existing conditions less accrued depreciation to arrive at a present value. It was pointed out to the Union Pacific engineers that this method would not be wholly acceptable to the District due to the fact that many of the conditions tending to Increase present-day construction costs did not exist when the system was Installed. However, in order that both appraisals would be on the same basis, it was agreed that the Union Pacific method be followed, with the understanding that the District reserved the right to make any adjustments which in its opinion would result in a more reasonable appraisal. Since the new appraisal made for the District shows a considerable increase over the appraisal made by J. M. Montgomery & Co., Inc. the following tabulation and explanation of differences is presented: * This appraisal is based on the physical assets of the Water Co. as of 12/31/50 but the prices used are as of 5/l/52 J.M.M. & Co., Inc. Reproduction Cost - Hew District* Reproduction Less Cost - Ifdw Depreciation Less Depreciation L.A.& S.L. Production Facilities $1 ,217,(A8 $ 975,60k $l,kk2,298 $1 ,090,11*8 L.V.L.& W. Distrib­ution Facilities Total -2-