Here's the skinny on land and resource value. Lumber prices could go up 10x, land could appreciate 10x yet they wood show the land at cost until they sold it, and the timber or other natural resources value never gets into play until it is harvested. Then they become inventory. If you had 10 trees that were harvestable per acre($500 a piece), and the acre was now worth $180. That acre and standing inventory would still be carried on the books as $27 instead of $5180.
In fact according to the paragraph below, the land should LOSE value on the books. (tax write offs?) No matter how much it is really worth!!!!
Makes you think, doesn't it?
The interesting thing to me is that Weyerhaeuser DOES show their standing timber inventory.
FROM the Weyerhaeuser 10k:
The standing timber inventory on these lands is approximately 94 million cunits (a cunit is 100 cubic feet of solid wood). The relationship between cubic measurement and the quantity of end products that may be produced from timber varies according to the species, size and quality of timber, and will change through time as the mix of these variables changes.
TIMBER AND TIMBERLANDS
Timber and timberlands are carried at cost less fee stumpage charged to disposals. Fee stumpage is the cost of standing timber and is charged to fee timber disposals as fee timber is harvested, lost as the result of casualty or sold. Depletion rates used to relieve timber inventory are determined with reference to the net carrying value of timber and the related volume of timber estimated to be available over the growth cycle. Timber carrying costs are expensed as incurred. The cost of timber harvested is inluded in the carrying values of raw material and product inventories, and in the cost of products sold as these inventories are disposed of.
Inventory Thousands of Acres at December 27, 1998
--------- -------------------------------------------
Millions Fee Long-term License
of Cunits Ownership Leases Arrangements Total
--------- --------- --------- ------------ --------
<S> <C> <C> <C> <C> <C>
Geographic Area
United States
West 56 1,989 -- -- 1,989
South 38 3,110 241 -- 3,351
--------- --------- --------- ------------ --------
Total United States 94 5,099 241 -- 5,340
--------- --------- --------- ------------ --------
Canada (1)
Alberta 91 -- -- 7,453 7,453
British Columbia 10 32 -- 2,867 2,899
Ontario 34 1 -- 4,220 4,221
Saskatchewan 118 -- -- 12,462 12,462
--------- --------- --------- ------------ --------
Total Canada 253 33 -- 27,002 27,035
--------- --------- --------- ------------ --------
TOTAL 347 5,132 241 27,002 (2) 32,375
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