Carter Development Company purchased, for cash, a large tract of land that was immediately…
Carter Development Company purchased, for cash, a large tract of land that was immediately platted and deeded into the following smaller sections: Section 1, retail development with highway frontage Section 2, multifamily apartment development Section 3, single-family homes in the largest section Based on recent sales of similar property, the fair market values of the three sections are as follows: Section 1, $630,000 Section 2, $378,000 Section 3, $252,000
Required 1. What value is assigned to each section of land if the tract was purchased for (a) $1,260,000, (b) $1,560,000, and (c) $1,000,000? 2. How does the purchase of the tract affect the balance sheet? 3. Why would Carter be concerned with the value assigned to each section? Would Carter be more concerned with the values assigned if instead of purchasing three sections of land, it purchased land with buildings? Explain
