To: David T. Groves who wrote (1917 ) 11/12/1999 7:04:00 AM From: David T. Groves Read Replies (2) | Respond to
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.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.
