Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $5.2
ID: 2709485 • Letter: K
Question
Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $5.2 million. The machinery can be sold to the Romulans today for $7.4 million. Klingon’s current balance sheet shows net fixed assets of $4.0 million, current liabilities of $830,000, and net working capital of $142,000. If all the current assets were liquidated today, the company would receive $945,000 cash. (Enter your answer as directed, but do not round intermediate calculations.)
What is the book value of Klingon’s total assets today? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)
Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $5.2 million. The machinery can be sold to the Romulans today for $7.4 million. Klingon’s current balance sheet shows net fixed assets of $4.0 million, current liabilities of $830,000, and net working capital of $142,000. If all the current assets were liquidated today, the company would receive $945,000 cash. (Enter your answer as directed, but do not round intermediate calculations.)
Explanation / Answer
Book value of Klingon’s total assets today calculated below:-
Net working capital = Current assets - Current liabilities
Current assets = Net working capital + Current liabilities
= 142000 + 830000 = $972,000 (Book value of current assets)
The Market value of Fixed assets & Current assets is Given, Therefore,
Book value of current assets = $972,000
Market value of Current assets = $945,000
Book value of net fixed assets = 4 million i.e. (4 * 1000000 ) = $4000000
Market value of Net fixed assets = 7.4 million i.e. (7.4 * 1000000) = $7400000
Market value of Total assets = 945000 + 7400000 = $8345000
Book value of Total assets = 972000 + 4000000 = $4972000
Conclusion:- Book value of Total assets = $4972000 (In other words 4.972 Million dollors)
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