WRITING UP THE ASSETS.

Evening Post, Volume CXII, Issue 54, 1 September 1926, Page 11

WRITING UP THE ASSETS.

"With.regard to the E25.750 loss on shares in the Taranaki Farmers' Meat Company, Limited (in liquidation), your directors anally decided to meet the loss by appreciating the value of our assets, a course amply warranted on worth ■ disclosed by valuation. After applying £1250 from reserve account, the balance was met by writing up the assets' in the amounts shown in the balance-sheet."

This paragraph is taken from tho twentyBfth annual report of tho Taranakl Producers' Freezing Works Company, which freezes' for a number of shareholding dairy companies. In his remarks on the subject at the annual meeting hold on Friday at New Plymouth,, the chairman of directors (Mr. J. Brown) Bald that the loss was the result of having- put a largo sum of their money into the Taranaki Farmers' Meat Company "in order to secure additional freezing and storafce accommodation should it bo required." To meet tho loss, the directors at first thought of writing down their capital, but finally camo to tho conclusion that the simplest way would be to appreciate their assets. Had they written down the capital a considerable amount of trouble would have been occasioned each shareholding company, whereas by the method they had adopted this had been avoided. A valuation of the work 3 and plant was made by reliable authorities, and it was found they had ample margin to appreciate the assets, tho actual value of tho property being far in excess of that shown in the books of the company. A portion of the reserve fund was also utilised. Simultaneously the directors decided to write oft sufficient depreciation over the next eight yoar3 to bring the assets back to tho old value, henco the reason for writing oft £4000 this present year. .

Mr. A. Morton, referring to tho appreciation of tho assets, said the procedure was no doubt an unusual one, but in view of the fact thati.the value of their assets was so much in excess of the boole value the directors "fell fully instilled in adopting thie course. . Had they written down the capital it would havo meant a great deal of troublo to shareholding companies, but this was now avoided. Even now tho value .of tho assots sot out in tho books of the company was a long way below their actual value..

This course was approved.