disposal of acreage HELP
Options
taskey
Registered Posts: 1,800 Beyond epic contributor 🧙♂️
really confoosed now lol
june 98, p bought 50 acres for £300,000
feb 03, p sold 20 acres for £180,000
remaining 30 were valued @ £250,000
Mar 09, p sold remaining 30 for £350,000
Answer given
February 2003 disposal:
cost of 20 acres = 300,000 x 180,000 / 180,000 + 250,000 = £125,581
Remaining cost for the 30 acres = £174,419
now
WHAT<HOW< WHY< WHERE?????
surely 300,000 x 180,000 / 180,000 is 300,000??????
please someone tell me where i am going wrong as this just seems silly!!!
june 98, p bought 50 acres for £300,000
feb 03, p sold 20 acres for £180,000
remaining 30 were valued @ £250,000
Mar 09, p sold remaining 30 for £350,000
Answer given
February 2003 disposal:
cost of 20 acres = 300,000 x 180,000 / 180,000 + 250,000 = £125,581
Remaining cost for the 30 acres = £174,419
now
WHAT<HOW< WHY< WHERE?????
surely 300,000 x 180,000 / 180,000 is 300,000??????
please someone tell me where i am going wrong as this just seems silly!!!
0
Comments

The formula is Original cost x A/(A+B)
with A being proceeds and B being market value of remaining land.
So forumla is 300,000 x 180,000/(180,000 + 250,000)
300,000 x 180,000/430000 = 125581
Think from your post you are adding the 250,000 to the answer instead of including it in brackets as above.
My first post answering so hope the above makes some sort of sense!0 
clear as mud now, thanks
in the answers from the AAT there are no brackets  as in my post. it would have made so much more sense if the brackets were included, as i can work it out from there.
thanks
Tracy0 
Current value of land is
20 acre £180
30 acre £250
total £430
So to work out the purchase cost of the amount sold you use that proportion, to split up the 300;
original cost 300 x (180/430) = 125,581
and purchase cost of remaining;
300 x (250/430)0
Categories
 All Categories
 1.2K Books to buy and sell
 2.3K General discussion
 12.4K For AAT students
 298 NEW! Qualifications 2022
 154 General Qualifications 2022 discussion
 11 AAT Level 2 Certificate in Accounting
 54 AAT Level 3 Diploma in Accounting
 77 AAT Level 4 Diploma in Professional Accounting
 8.8K For accounting professionals
 23 coronavirus (Covid19)
 271 VAT
 92 Software
 271 Tax
 135 Bookkeeping
 7.2K General accounting discussion
 198 AAT member discussion
 3.8K For everyone
 38 AAT news and announcements
 345 Feedback for AAT
 2.8K Chat and offtopic discussion
 581 Job postings
 16 Who can benefit from AAT?
 36 Where can AAT take me?
 42 Getting started with AAT
 26 Finding an AAT training provider
 48 Distance learning and other ways to study AAT
 25 Apprenticeships
 66 AAT membership