XYZ Co., has cash of $900 and accounts receivable of $1,300. The inventory cost
ID: 2739660 • Letter: X
Question
XYZ Co., has cash of $900 and accounts receivable of $1,300. The inventory cost $4,200 and can be sold today for $6,100. The fixed assets were purchased at a cost of $42,800 of which $18,300 has been depreciated. The fixed assets can be sold today for $19,500. What is the total book value of the assets of the company? XYZ Co., has cash of $900 and accounts receivable of $1,300. The inventory cost $4,200 and can be sold today for $6,100. The fixed assets were purchased at a cost of $42,800 of which $18,300 has been depreciated. The fixed assets can be sold today for $19,500. What is the total book value of the assets of the company?Explanation / Answer
Total book value of assets = Cash + Accounts receivable + Inventory Cost + (Fixed asset purchase cost - depreciation)
= $900 + $1,300 + $4,200 + $42,800 - $18,300
=$30,900
Fixed asset shall be taken as the book value , less accumulated depreciation, and not at the market value.
Similarly the inventory shall be taken at the cost or market value, which ever is lower, thus the book value shall be $4,200 and not $6,100.
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