FOREST VALUATION 



3. Capitalized Expenses 



This last transaction consists in marking up the capital assets 

 on the basis not of value, but of cost, to coincide with the addi- 

 tional capital advanced to meet annual expenses in absence of 

 revenue. Normally the deficit would appear as such in the 

 balance sheet and not in the capital account. 



The appreciation in value of capital, or unrealized profits, 

 requires no corresponding investment, and should be distin- 

 guished from increase in cost by a separate account. 



4. Appreciation of Assets 



II. PROFIT AND Loss ACCOUNT 



This account records the cash outlay and income during the year, and 

 its balance, indicating a net income or deficit, is then transferred to the 

 capital account, and appears in the balance sheet. 



Item i represents cost of assets sold, and this amount is 

 credited to the capital asset account. Item 2 includes 

 the current expenses of operation including taxes. Item 3, 

 interest on borrowed capital is met before further disposition 

 of income is permitted. In item 4, the depreciation fund thus 



