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Klingon Widgets, Inc., purchased new cloaking machinery four years ago for $8 mi

ID: 2462983 • Letter: K

Question

Klingon Widgets, Inc., purchased new cloaking machinery four years ago for $8 million. The machinery can be sold to the Romulans today for $7.3 million. Klingon’s current balance sheet shows net fixed assets of $6 million, current liabilities of $760,000, and net working capital of $219,000. If all the current assets were liquidated today, the company would receive $1.01 million cash.





Klingon Widgets, Inc., purchased new cloaking machinery four years ago for $8 million. The machinery can be sold to the Romulans today for $7.3 million. Klingon’s current balance sheet shows net fixed assets of $6 million, current liabilities of $760,000, and net working capital of $219,000. If all the current assets were liquidated today, the company would receive $1.01 million cash.

Explanation / Answer

To find the book value of current assets, we will use the following equation :-

Current assets = Net working capital + Current liabilities

= 219000 + 760000

= 979000

Book Value of Current assets = $ 979000

Market Value of Current assets = $ 1.01 million i.e., $ 1010000

Book value of Net Fixed assets = $ 6 million i.e., $ 6000000

Market value of Net fixed assets = $ 7.3 million i.e., $ 7300000

Book value of Klingon’s total assets = 979000 + 6000000= $ 6979000

Market value of Klingon’s total assets = 1010000 + 7300000 = $ 8310000