Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $12
ID: 2722730 • Letter: K
Question
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. What is the book value of Klingon's total assets today? (Enter your answer in dollars, not millions of dollars, e.g., 1, 234,567.) What is the sum of the market value of 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.)Explanation / Answer
A)Book value of total asset = current +fixed
= (Net working capital + current liabilities ) +Fixed asset
= (221000 + 800000) + 9,000,000
= 10,021,000
b)Market value = Market value of NWC + Market value of Fixed asset
= 1,030,000+ 11,000,000
= $ 12,030,000
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