Recently, the owner of Martha\'s Wares encountered severe legal problems and is

Question

Recently, the owner of Martha's Wares encountered severe legal problems and is trying to sell her business. The company built a building at a cost of $1,290,000 that is currently appraised at $1,490,000. The equipment originally cost $770,000 and is currently valued at $517,000. The inventory is valued on the balance sheet at $460,000 but has a market value of only one-half of that amount. The owner expects to collect 99 percent of the $250,200 in accounts receivable. The firm has $11,000 in cash and owes a total of $1,490,000. The legal problems are personal and unrelated to the actual business. What is the market value of this firm?

$747,000

$1,235,698

$1,005,698

$1,945,898

$1,485,898

Explanation / Answer

As the business is getting liquidated all asset and liabilities will be valued at its market value.(value realized from sale in market)

correct option is "C"

Building 1490000 Equipment 517000 Inventory [460000*1/2] 230000 Accounts receivable[250200*.99] 247698 cash 11000 less:liabilities -1490000 Net worth 1,005,698

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