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Conan O'Brien Logging and Lumber Company owns 4,000 acres of timberland on the north side of Mount Leno, which was purchased in 1998 at a cost of...
Conan O'Brien Logging and Lumber Company owns 4,000 acres of timberland on the north side of Mount Leno, which was purchased in 1998 at a cost of $650 per acre. In 2010, O'Brien began selectively logging this timber tract. In May of 2010, Mount Leno erupted, burying the timberland of O'Brien under a foot of ash. All of the timber on the O'Brien tract was downed. In addition, the logging roads, built at a cost of $154,000, were destroyed, as well as the logging equipment, with a net book value of $345,900. At the time of the eruption, O'Brien had logged 20% of the estimated 500,000 board feet of timber. Prior to the eruption, O'Brien estimated the land to have a value of $250 per acre after the timber was harvested. O'Brien includes the logging roads in the depletion base. O'Brien estimates it will take 3 years to salvage the downed timber at a cost of $724,200. The timber can be sold for pulp wood at an estimated price of $4 per board foot. The value of the land is unknown, but must be considered nominal due to future uncertainties.