Page 18 - RosboroAR2018

When the rst board rolled through Rosboro’s then state-of-the-art facility in June of 1940, the local newspaper touted the mill as the “Northwest’s most modern timber manufacturing plant.” Rosboro has maintained its dedication to manufacturing e ciency ever since, by focusing on innovation and technology.
PROPERTY, PLANT & EQUIPMENT -
Properties are recorded at cost. Additions, betterments and replacements of major units of property are capitalized. Maintenance, repairs, and minor replacements are charged to expense as incurred. Depreciation is computed using the straight-line method.
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash ows expected to be generated by the asset. If an asset is considered to be impaired, the loss recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
TIMBER ASSETS – Timber assets are comprised
of timber rights under lump-sum contracts, timber deposits, prepaid logging roads and other timber-related assets. The Company acquires and owns rights to harvest timber under two principal types of contracts:
(1) “Lump sum,” requiring payment of a stipulated total amount for all timber on the speci ed tract. These contracts are treated as timber owned and included along with related imputed interest charges in depletion totals in the nancial statements.
(2) “Fixed price per thousand board feet cut,” requiring the Company to cut and remove all merchantable timber on the speci ed tract and to pay for it at the contract rate as cut.
The Company accounts for timber acquired under “lump
sum” contracts as timber owned and the related obligation
as a liability. The Company classi es its investment in timber properties expected to be harvested in the next scal year as current based on management’s annual logging plan. The “ xed price per thousand board feet cut” contracts, which require harvesting at various times over the next several years, are considered purchase commitments. As of December 31, 2018, the Company is committed to purchase approximately 38.9 million board feet of timber at an estimated stumpage cost of $10,900,000.
Contract depletion and road amortization are charged to operations as timber is harvested with rates being determined with reference to the cost of timber and roads, and the related estimated recoverable timber volumes.
GOODWILL – Goodwill represents the di erence between the fair value of the consideration transferred (purchase price) of the acquired business and the fair value of the identi able tangible and intangible net assets recognized in the acquisition. Goodwill is amortized on a straight-line basis over ten years and is assessed for impairment if an event or circumstances indicate that the fair value of the entity may be less than its carrying amount. A goodwill impairment loss is recognized to the extent that the carrying amount of the entity including goodwill exceeds its fair value. Amortization expense totaled $1,121,000 for both years ended December 31, 2018 and 2017.
INCOME TAXES - Income taxes are accounted
for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary di erences between the
18 ANNUAL REPORT 2018