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ML Macadamia Orchards LP Message Board

  • pga747 pga747 Oct 27, 2006 7:00 AM Flag

    Back in 1991 I bought

    shares at about $13.00 on advice that the land on their books was valued at the ORIGINAL COST, which was no near the real value. (See article in Taipan publication 1991)
    My tax cost now is down to about $4.00.
    Has the company ever upped the value of the land on their financial statements?
    What's the real value if they sold the land??

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    • I don't know why you needed to post so many threads but the land discussion has already been made below:

      http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_M/threadview?m=tm&bn=13013&tid=1950&mid=1951&tof=12&rt=2&frt=2&off=1

      The land has very little resale value except for agriculture. Incase you missed Hawaii zoning restrictions, they don't want the entire island to turn into a block of concrete. I believe you'll find that agricultural land is very hard to convert to commercial or single family housing. As the post above eludes to, another limited partnership on Hawaii went bankrupt (soybean producer, I believe) and had to sell the land in larger chunks (I believe the land had to remain "productive farm land", but not certain about that point as I haven't found much more information) in order for them to divide up the land for single family housing...from what I recall ~5 acre chunks.

      So, to be honest, I think the restrictions on selling the land would be so significant that you wouldn't be able to achieve the "windfall" profits reguardless of what the land would be worth. As the zoning restrictions artificially reduce the value of the land -- even if the lot across the street is worth 100K/acre, I don't think the orchards with agricultural zoning will hit that mark and why your calculations come up far lower...

      Best,

      Aaron

    • 2221 fee simple ownership and the other leasehold

      This kills my analysis, but would put value at around 6/share. the leaseholds have value too, but I don't know how much. How do they put leasehold on the books? Is it depreciated because use is lost?


      in 2000 they can lease 1 acre for $6/month, but what was there a down payment for the lease?

    • Anybody know what type of ownership they have on the land leasehold/freehold?

    • "The increase in 2006 was attributed to the purchase of 21 tree acres of macadamia orchards for $440,000, computers, a vehicle and upgrades to operating machinery. "

      maybe about 60k for "computers, a vehicle and upgrades to operating machinery"

      so numbers should be $18k/acre and will equal about

      $11/share

    • You obviously have not taken any accounting courses. After any corporation records the purchase of land (or any other assets) you cannot revalue it. Any "revaluation" only takes place when you sell the asset (presumably) at fair value or whatever the market will bear. Only at that point of sale can you record the gain on the increase in value of the asset. Until you record the sale there is no assurance you could achieve a higher value (and besides, if you recorded the higher value of land as you went along, you would record the corresponding profit --- remember debits must equal credits, if land (a debit) increases...what would be your credit? Presumably with your accounting theory, corporations would get stuck paying income taxes on increased "value" of assets which it may never be able to realize.

      Alas, to answer your question directly, NO. All assets (except those available for sale) are on the balance sheet at cost.

      On the flip side, corporations could offer to disclose what it believes the current value of its assets are. To be honest the only people who probably care about this information would be the financial institutions providing short (agricultural loans, etc.) and long term credit facilities to the company which might secured by the land, trees, and other facilities the company ownes.

      Best,

      Aaron

 
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