disposal of acreage HELP

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taskey
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!!!

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  • Lou1234
    Lou1234 Registered Posts: 210 Dedicated contributor 🦉
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    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!
  • taskey
    taskey Registered Posts: 1,800 Beyond epic contributor 🧙‍♂️
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    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

    Tracy
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
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    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)
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