Lump-Sum Purchase of Assets and Subsequent Events

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, $588,980 Section 2, $312,520 Section 3, $300,500

Required:

1. What value is assigned to each section of land if the tract was purchased for (a) $1,202,000, (b) $1,526,000, and (c) $962,000?

Total Purchase Price Scenario	Land Section 1: Cost Assigned	Land Section 2: Cost Assigned	Land Section 3: Cost Assigned
a. $1,202,000	$	$	$
b. $1,526,000	$	$	$
c. $962,000	$	$	$