THE SOUTHLAND FROZEN MEAT CO.'S BALANCE-SHEET.

Southland Times, Issue 17654, 11 February 1916, Page 2

THE SOUTHLAND FROZEN MEAT CO.'S BALANCE-SHEET.

To the Editor.

Sir, —My sympathies are with Mr Handyside, as I cannot see the advantage in having huge sums' placed to the credit of Reserve Account when it would certainly look much better if written oft the. Property Account. As a matter of fact the sums do not represent anything but book entries and could not be made use of if necessity arose. There is a credit balance at the Bank and it is quite right that a Fire Insurance Reserve should be maintained, but beyond that, and, say, Accident Insurance Reserve, the Reserve Account means nothing at all and should be wiped out altogether. AVhat about the valne of tlie Assets? AVhy not write those down to almost vanishing point? Even admitting the value is there the general practice is to write down all perishable assets to a very small compass. Should there still be a surplus then the charges should he reduced as the Company is a co-opera-tive concern, more interested in carrying out the duties of agent for the growers of Southland than in making profits. Not that unreasonable, profits have been made. On the contrary shareholders have not received fair interest for their money since the Company started, especially as a large number of shareholders arc not directly interested in farming operations. There can he no argument in favour of keeping up the value of the Assets in the balance-sheet, and upon the other side showing a Reserve of £25,000 which does not exist except as a book entry. Mr McQueen's argument in the past was that he had an offer in his pocket for the works at the book value. AYell, oven if lie had that does not affect the position at all, because thq works are not for sale, and the fact of the value being low does not matter, as even if a sale was contemplated the book value would not be accepted. It is well known that such works become obsolete in a few years; therefore the heavier the writing down tlie better. Why did the Company write down its capital? Simply because it was lost. The same thing applies to the plant and works. As years go on the. value is lost, and it is bad policy keeping the value high in the books. ’lf we take the Bank of Australasia as a. pattern, the book value of the works would be about onehalf it now appears. ' The question of Reserve Fund looked at from this standpoint is not vital, but certainly the balance sheet would present a better appearance if tfie figures were reduced.— •I; am, etc* ’ ' SHAREHOLDER. • Feb. 9.