Timberlands: Generally Accepted Accounting Principles and Fair Value

The United States is currently going through a big decision. It is deciding on whether to fully adopt International Financial Reporting Standards (IFRS), or to stay with the current U.S Generally Accepted Accounting Principles (GAAP). Since this is such a major decision, now would be an opportune time to take a look at what the pros and cons would be of switching to this new way of financial reporting, and in doing so, show why I believe the costs (both financial and otherwise) are too high to adopt a new set of reporting standards.

This document compares and contrasts three future views on timber supply in the southern region of the US as projected by three third-party forecasting service providers – Forest Economic Advisors (FEA), Resource Information Systems Inc. (RISI), and Forisk. All three forecasts lean heavily on data from the Forest Inventory and Analysis (FIA) National Program and Resource Planning Assessments (RPAs) in their projections. In addition, Forisk explicitly breaks down softwood growing stock inventory into pulp, CNS, and sawtimber inventories whereas FEA and RISI are explicit only about sawtimeber and overall softwood growing stock inventories. This further complicates the comparison among the three providers but allows us to gain some insights on the relative shares of the three above components of timber inventory in the South as projected by Forisk.

* Long term investments are reported on the balance sheet at a fair market value instead of the purchase price

The history of Timber in Texas begins in the 1800’s. According to Maxwell (2010), there was evidence of sash mills being used before the Texas Revolution to produce lumber. The use of the first steam sawmill in Texas was supposed to be released by John Richardson Harris in 1829, but he unfortunately died before he could come out with this project. His brothers carried out his will and created the sawmill, which led to more than 200 sawmills operating along the Gulf Coast.

Fosbre, A. B., Kraft, E. M., & Fosbre, P. B. (2009). THE GLOBALIZATION OF ACCOUNTING STANDARDS: IFRS VERSUS US GAAP. Global Journal Of Business Research (GJBR

This research project will inform the reader of the difference between the United States accounting standards and International accounting standards. The United States uses the Financial Accounting Standards Board (FASB) to issue financial reporting procedures. The International Financial Reporting Standards (IFRS) are issued by the International Accounting Standards Board (IASB). There are proposals for the United States to adopt the International standards. Financial reporting procedures are debated about the United States using the Generally Accepted Accounting Procedures (GAAP) or following the global procedures. This

Since 2002, Financial Accounting Standards Board (FASB) and International Accounting Standards Board’s (IASB) have been working toward “convergence” of US General Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). They have made significant progress in efforts to converge critical accounting standards such as those dealing with revenue recognition, financial instruments and leases. Once these projects are complete, the "era" of convergence will be at an end. Nevertheless, the benefits for investors of eventually getting to consistently applied, high-quality, globally accepted accounting

The documents that comprise GAAP vary in format, completeness, and structure. As a result, financial statement preparers sometimes are not sure whether they have the right GAAP; determining what is authoritative and what is not becomes difficult. In response to these concerns, the FASB developed the Financial Accounting Standards Board Accounting Standards Codification. The FASB’s primary goal in developing the Codification is to provide in one place all the authoritative literature related to a particular topic. Professional accountants pay for access to the FASB. The OU Accounting Department has paid for academic access to the FASB Codification. Our Login information is:

When stakeholders and other interested parties evaluate possible future investments opportunities or financial lending to a corporation, they take a close look at a firm’s performance which is highly measured by revenue; a necessary tool in decision-making. The GAAP standards in the U.S. however are very different from standards by the IFRS (International Financial Reporting Standards), and both boards are in need of revision.

With the growth of international business there is a need to standardize financial statements globally. Presently there are “approximately 120 foreign private issuers currently that report to the Commission using IFRS financial statements.” By standardizing accounting practices investors will be able to make informed decisions based on comparability and accuracy of financial statements. The SEC released this statement in 2008, “We believe that IFRS has the potential to best provide the common platform on which companies can report and investors can compare financial information.” The SEC has created a “Roadmap” or plan to convert US GAAP over to IFRS. According to The Committee of

Over a decade ago, it was believed that the whole world would likely adopt the Generally Accepted Accounting Principles (GAAP). At the point in time, the International Financial reporting Standards (IFRS) was only about ten years old. In the last decade, the IFRS has been adopted in many growing countries. Currently, it is anticipated that the U.S. will converge its GAAP with the international IFRS, leaving behind only a modified IFRS. This may occur as early as 2014.

The cost approach is used to determine the assessed value of commercial, industrial, institutional, agricultural and other non-residential properties. As for residential properties, a market adjusted cost approach (a combination of the cost approach and the direct comparison approach) is currently used for all. The cost approach is based on the assumption that an informed purchaser would pay no more for a property than it would cost to purchase a similar piece of land, on which a building could be constructed with similar characteristics. The land value is determined by the assessor analysing sales of vacant land in the geographic area of the subject, and then adding the cost of replacing the building(s), less depreciation and other improvements.

When time came upon the 1880’s, the lumber industry hit its high point. The industry really focused and invested seriously into it. In the same time span, white pines had an unexplainable growth rate, and hit a massive peak. Rivers and waterfalls, too, had followed a path to guide logs to the buildings that would produce and manufacture the logs.

All valuations were valued in accordance with NSW Treasury Policy TPP 14-01 “Valuation of Physical Non-Current Assets at Fair Value”, AASB13 “Fair Value Measurement and AASB 116 “Property, Plant and Equipment” with the following specific treatments:

The accounting world is shaped by stringent and clear rules, principles, standards and guidelines. These are all meant to define accounting operations and reporting discipline. With the emergence of International Accounting Standards (IAS), which was later replaced by International Financial Reporting Standards (IFRS), the accounting concepts, analysis, disclosures, reporting and presentation became easier and practical. Currently, accountants, managers and related parties find it concrete and consistent in protecting professional boundaries.