106 FOREST VALUATION 



sold, or that the timber is immediately removed and the land 

 sold or appraised. 



Actual profits on the investment in land and timber exclusive 

 of lumbering, for a large operation, must be based on actual 

 sale of land rather than appraisal at time of sale of timber, 

 and if this sale is delayed, as it may be, for many years, the 

 transaction is not closed. A new account may be opened for 

 the denuded land, crediting it to the original account preferably 

 at the cost, not the present sale value of land, and debiting 

 the land account with this investment. If a "cost" account is 

 kept as before, the land will be charged with interest until sold. 



123. Profits on a Stand of Timber. Whether or not the 

 owner intends his land for future crops of timber, the profit on 

 the existing stand may be separately stated, by charging interest 

 on the cost of land as an expense against the timber, and credit- 

 ing the land at its original cost, when the timber is sold. 



p = 7 + S c - (C + S c } i.op n - E (i.op n - i) 



= 7 + S c + E - (C + S c + ) i.op. (K) 



This formula differs from H only by the introduction of S c 

 as an asset in place of S S) and may be expanded in the same 

 manner as HI. 



124. Anticipated Profits on Young Timber. Assuming that 

 S c is credited at the time the timber is cut, the profits of that 

 year may be anticipated for the year a in one of two ways. 

 The net profit (K) may be discounted to the present (II), or 

 the balance may be struck for the given year by direct compu- 

 tation of value and cost for that year. In the latter case, 



Cost = (C + S c + E) i.op a - (S c + ). 



P = Y + o ^+ E - (C + S c + JE) i.o/>". (KO 



This formula may be expanded by the addition of income 

 and cost items, regardless of whether these costs occur after 

 the year of valuation, or income occurs previous to this year. 



