I am struggling with this.... can someone show me how to answer this problem? Kl

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I am struggling with this.... can someone show me how to answer this problem?

Klingon Widgets, Inc., purchased new cloaking machinery five years ago for $5 million. The machinery can be sold to the Romulans today for $4.5 million. Klingon’s current balance sheet shows net fixed assets of $3.5 million, current liabilities of $750,000, and net working capital of $229,000. If all the current assets were liquidated today, the company would receive $1.11 million cash.

I am struggling with this.... can someone show me how to answer this problem?

Klingon Widgets, Inc., purchased new cloaking machinery five years ago for $5 million. The machinery can be sold to the Romulans today for $4.5 million. Klingon’s current balance sheet shows net fixed assets of $3.5 million, current liabilities of $750,000, and net working capital of $229,000. If all the current assets were liquidated today, the company would receive $1.11 million cash.

Explanation / Answer

current assests = 229000 + 750000 = 979000

book value of assests

979000 + 3500000 = 4,479,000

market value of assests

1,110,000 + 4500000 = 5,610,000

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