Heart & Home Properties is developing a subdivision that includes 600 home lots. The 450 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 150 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $55,000 and for each Hilltop lot is $110,000. The developer acquired the land for $4,000,000 and spent another $3,500,000 on street and utilities improvements. Assign the joint land and improvement costs to the lots using the value basis of allocation and determine the average cost per lot.
Heart & Home Properties is developing a subdivision that includes 600 home lots. The 450 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 150 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $55,000 and for each Hilltop lot is $110,000. The developer acquired the land for $4,000,000 and spent another $3,500,000 on street and utilities improvements. Assign the joint land and improvement costs to the lots using the value basis of allocation and determine the average cost per lot.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Heart & Home Properties is developing a subdivision that includes 600 home lots. The 450 lots in the
Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 150 lots
in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $55,000
and for each Hilltop lot is $110,000. The developer acquired the land for $4,000,000 and spent another
$3,500,000 on street and utilities improvements. Assign the joint land and improvement costs to the lots
using the value basis of allocation and determine the average cost per lot.
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