There was one problem in todays F6 exam I had not expected: What if one first buys a plot of land (say 10 acres) for 1000 $, then sells one acre for 200 $ with the rest of them at that time having a market value of 1800? Obviously, the allowable cost would be 200/(200+1800)*1000 = 100
Does that mean that the base cost of the remaining 9 acres will then be 1000 – 100 = 900 or will the base cost be the 1800 given in the question?