Question

Klingon Cruisers, Inc., purchased new cloaking machinery five years ago for $15 million. The machinery can be sold to the Romulans today for $14.3 million. Klingon's current balance sheet shows net fixed assets of $12 million, current liabilities of $840,000, and net working capital of $223,000. If all the current accounts were liquidated today, the company would receive $1.05 million cash.

What is the book value of Klingon's total assets today? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

Book value of total assets             $

What is the sum of the market value of the NWC and the market value of fixed assets? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

Market value of NWC and fixed assets      

Answer 1

Answer a.

Book value of net working capital = Book value of current assets - Book value of current liabilities
$223,000 = Book value of current assets - $840,000
Book value of current assets = $1,063,000

Book value of total assets = Book value of current assets + Book value of net fixed assets
Book value of total assets = $1,063,000 + $12,000,000
Book value of total assets = $13,063,000

Answer b.

Market value of NWC = $1,050,000
Market value of fixed assets = $14,300,000

Market value of NWC and fixed assets = Market value of NWC + Market value of fixed assets
Market value of NWC and fixed assets = $1,050,000 + $14,300,000
Market value of NWC and fixed assets = $15,350,000