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Conan O'Brien Logging and Lumber Company own 3,700 acres of timberland on north side of Mount Leno, which was bought in 2000 at a cost of $610 per acre. In the year 2012, O'Brien starts selectively logging this timber tract. In May of 2012, Mount Leno erupted, burying the timberland of O'Brien beneath a foot of ash. All of the timber on the O'Brien tract was downed. Additionally, the logging roads, built at a cost of $160,000, were destroyed, and also the logging equipment, with a total book value of $309,900.

At the time of the eruption, O'Brien had logged 20% of the estimated 520,000 board feet of timber. Prior to the eruption, O'Brien estimated the land to encompass a value of $270 per acre after the timber was harvested. O'Brien comprises the logging roads in the depletion base.

O'Brien estimates it will take 3-years to salvage the downed timber at a cost of $744,600. The timber can be sold for pulp wood at an estimated price of $3 per board foot. The value of land is unknown, however should be considered nominal due to future uncertainties.

Basic Finance, Finance

  • Category:- Basic Finance
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