Home Properties is developing a subdivision that includes 360 home lots. The 240 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 120 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $43,000 and for each Hilltop lot is $105,000. The developer acquired the land for $2,400,000 and spent another $1,200,000 on street and utilities improvements. Assign the joint land and improvement costs of $3,600,000 to the Canyon section and the Hilltop section using the value basis of allocation. Note: Do not round your intermediate calculations. > Answer is not complete. Sales Value Percent of Sales Value Cost to Allocate Allocated Cost Numerator Denominator Canyon section Hilltop section $ 10,320,000 12,600,000 $ 10,320,000 $ 4,800,000 % of Sales Value 215.00% 12,600,000 4,800,000 (115.00)% Totals $ 22,920,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 14P
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Home Properties is developing a subdivision that includes 360 home lots. The 240 lots in the Canyon section are below a ridge and
do not have views of the neighboring canyons and hills; the 120 lots in the Hilltop section offer unobstructed views. The expected
selling price for each Canyon lot is $43,000 and for each Hilltop lot is $105,000. The developer acquired the land for $2,400,000 and
spent another $1,200,000 on street and utilities improvements.
Assign the joint land and improvement costs of $3,600,000 to the Canyon section and the Hilltop section using the value basis of
allocation.
Note: Do not round your intermediate calculations.
> Answer is not complete.
Sales Value
Percent of Sales Value
Cost to
Allocate
Allocated
Cost
Numerator
Denominator
Canyon section
Hilltop section
$ 10,320,000
12,600,000
$ 10,320,000
$
4,800,000
% of Sales
Value
215.00%
12,600,000
4,800,000
(115.00)%
Totals
$ 22,920,000
Transcribed Image Text:Home Properties is developing a subdivision that includes 360 home lots. The 240 lots in the Canyon section are below a ridge and do not have views of the neighboring canyons and hills; the 120 lots in the Hilltop section offer unobstructed views. The expected selling price for each Canyon lot is $43,000 and for each Hilltop lot is $105,000. The developer acquired the land for $2,400,000 and spent another $1,200,000 on street and utilities improvements. Assign the joint land and improvement costs of $3,600,000 to the Canyon section and the Hilltop section using the value basis of allocation. Note: Do not round your intermediate calculations. > Answer is not complete. Sales Value Percent of Sales Value Cost to Allocate Allocated Cost Numerator Denominator Canyon section Hilltop section $ 10,320,000 12,600,000 $ 10,320,000 $ 4,800,000 % of Sales Value 215.00% 12,600,000 4,800,000 (115.00)% Totals $ 22,920,000
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