INVESTMENTS AND COSTS IN FOREST PRODUCTION 83 



This investment feature is even more conspicuous in the case 

 of stands in which a large per cent remains after logging. 



In either case, the sale of the greater portion of the merchant- 

 able stand gives the basis for an appraisal of the remaining timber. 

 A balance may be struck between past costs and income and 

 the remaining crop credited with its present value, which is 

 then charged as an initial investment for the ensuing period. 

 This would show profits on the entire crop, and a reinvestment 

 of the portion left standing. If this appraisal is not used, the 

 profits are confined to the timber actually cut, and the invest- 

 ment would not be charged against the new crop or period. 



The former method of accounting is preferable. The use of 

 profits to cancel investment may be pushed to illegitimate 

 lengths, as when income from the sale of timber is allowed to 

 " wipe out" the cost of the land, which is then carried as having 

 no "cost" or "value" for a succeeding period. In this case, 

 income from sales should be permitted to offset only the cost 

 of the timber sold, while the land ( 96) must be separately 

 valued, and will be charged with interest in the future reckoning. 



108. Cost of Many-aged Forests. Proprietary accounts of 

 investment for large forest properties are kept very simply (91). 

 The same is true of such an account when dealing with single 

 stands composed of trees of many ages. But the question 

 arises as to whether income from such a stand should cancel 

 original capital investments, or be regarded purely as interest 

 or dividends on this capital. 



If the forest is established and is renewed, so that, whether 

 the cutting be annual or at intermittent periods, it may be 

 maintained in amount and value indefinitely, the cost of the 

 stand can be considered as a unit, regardless of the separate 

 age classes ( 161). This cost may be the price of purchase or 

 the cost of production ( 109). In a stand of all ages, producing 

 annual income, this cost does not increase and the net income is 

 merely the annual dividends on the investment. None of this 

 income is needed for the replacement of capital. 



In a forest yielding an intermittent rental, the cost or total 

 investment continues to increase ( 92) until a payment of 



