Klingon Widgets, Inc., purchased new cloaking machinery four years ago for $12 m
ID: 2659444 • Letter: K
Question
Klingon Widgets, Inc., purchased new cloaking machinery four years ago for $12 million. The machinery can be sold to the Romulans today for $10.8 million. Klingons current balance sheet shows net fixed assets of $10 million, current liabilities of $850,000, and net working capital of $249,000. If all the current assets were liquidated today, the company would receive $1.16 million cash.
Klingon Widgets, Inc., purchased new cloaking machinery four years ago for $12 million. The machinery can be sold to the Romulans today for $10.8 million. Klingons current balance sheet shows net fixed assets of $10 million, current liabilities of $850,000, and net working capital of $249,000. If all the current assets were liquidated today, the company would receive $1.16 million cash.
Explanation / Answer
Net working capital = Current assets-current liabilities $249,000= Current assets-$850,000 Current assets= $1,099,000 Book value of total assets Book value of fixed assets $10 million Add: book value of current assets $1.099 million total book value of assets $11.099 million Mkt value Mkt value of fixed assets $10.8 million Add: mkt value of current assets $1.16 million Total mkt value of assets $11.96 million
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