INVESTMENTS AND COSTS IN FOREST PRODUCTION 71 



wholly neglected ( n) and profits received after many years are 

 shown in amount only, as though of equal value with profits 

 of the year. In contrast, cost accounts (25) seek to eliminate 

 such inconsistencies and express costs in their true economic 

 relation to income. This is accomplished by the adoption of a 

 rate of interest ( 52 and 53) by which all expenditures are cal- 

 culated forward to the year when the income, for which the cost 

 was incurred, is finally received ( 23). In practice, a separate 

 cost account could be kept for each stand, lot or subdivision. 

 The summary or total to a given date (the present) of these 

 accounts would reveal to the proprietor his exact investment, 

 including the "unearned" interest. This summary should differ 

 from the corresponding items in the proprietary account by just 

 the amount of this interest. 



93. Investments, or Permanent Outlay. Expenditures for 

 property of a durable character in forestry are confined to land 

 and to permanent roads, houses, telephones or other improve- 

 ments. The original cost of these may be considered a capital 

 expenditure. 



94. Expenses, or Temporary Outlay in Forestry. Temporary 

 or current expenses would ordinarily include raw materials as 

 well as items like wages (21). But when wages are expended 

 on planting trees and when the raw material consists of stand- 

 ing timber, which will remain as property for a period of years, 

 this treatment is open to question. After the forest property 

 has passed through its initial stage of construction, and is pro- 

 ducing annual revenue, many items, such as reforestation, which 

 at first call for an initial investment, can be regarded as current 

 outlay. In this class will fall all expenses for upkeep of im- 

 provements. 



95. Land. Land is the one investment which can be credited 

 as capital not ordinarily subject to depreciation, and indispen- 

 sable to forestry. It remains after the timber is harvested. 

 The purchase price of land is the only land value which can 

 legitimately be entered in the cost account, and this valuation 

 can remain the same as long as the owner retains the land for 

 forest production. A sale of the property, terminating the 



