It can include site preparation costs such as tree girdling, stump and brush removal, seedling costs, paid labor and a prorated cost of equipment used. The recovery of these costs may be accomplished by two methods. First, the cost can be capitalized and recovered by depletion when the timber is sold. This account includes equipment associated with a woodlot operation. It may include chainsaw, sawmill, trucks or tractors.
Equipment is considered a capital asset and is depreciable.
In large operations, individual accounts on each piece of equipment may be helpful. If only part of the equipment is with the woodlot operation, only a pro rata portion can be allocated to woodlot deductible expenses. Normal expenses of operating the equipment and minor repairs or maintenance are considered yearly operating expenses. Major repairs that materially increase the value or life of the equipment are capital investments and must be depreciated. All educational programs conducted by Ohio State University Extension are available to clientele on a nondiscriminatory basis without regard to race, color, creed, religion, sexual orientation, national origin, gender, age, disability or Vietnam-era veteran status.