Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $12 million. The machinery can be sold to the Romulans today for $11 million. Klingon’s current balance sheet shows net fixed assets of $9 million, current liabilities of $800,000, and net working capital of $221,000. If all the current accounts were liquidated today, the company would receive $1.03 million cash. |
a. What is the book value of Klingon’s total assets today?
b.What is the sum of the market value of NWC and the market value of fixed assets?
a) | Book value of current assets = Net working capital+Current liabilities = 221000+800000 = | $ 1,021,000 |
Total assets = Net fixed assets+Current assets = 1021000+9000000 = | $ 10,021,000 | |
Book value of total assets | $ 11,042,000 | |
b) | Market value of fixed assets | $ 11,000,000 |
Market value of NWC = Market value of current assets-Current liabilities = 1030000-800000 = | $ 230,000 | |
Market value of NWC+Market value of fixed assets | $ 11,230,000 |
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