Klingon Widgets, Inc., purchased new cloaking machinery four years ago for $8 mi
ID: 2462983 • Letter: K
Question
Klingon Widgets, Inc., purchased new cloaking machinery four years ago for $8 million. The machinery can be sold to the Romulans today for $7.3 million. Klingon’s current balance sheet shows net fixed assets of $6 million, current liabilities of $760,000, and net working capital of $219,000. If all the current assets were liquidated today, the company would receive $1.01 million cash.
Klingon Widgets, Inc., purchased new cloaking machinery four years ago for $8 million. The machinery can be sold to the Romulans today for $7.3 million. Klingon’s current balance sheet shows net fixed assets of $6 million, current liabilities of $760,000, and net working capital of $219,000. If all the current assets were liquidated today, the company would receive $1.01 million cash.
Explanation / Answer
To find the book value of current assets, we will use the following equation :-
Current assets = Net working capital + Current liabilities
= 219000 + 760000
= 979000
Book Value of Current assets = $ 979000
Market Value of Current assets = $ 1.01 million i.e., $ 1010000
Book value of Net Fixed assets = $ 6 million i.e., $ 6000000
Market value of Net fixed assets = $ 7.3 million i.e., $ 7300000
Book value of Klingon’s total assets = 979000 + 6000000= $ 6979000
Market value of Klingon’s total assets = 1010000 + 7300000 = $ 8310000
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