5.00 points Klingon Widgets, Inc., purchased new cloaking machinery three years

Question

5.00 points

Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $4.0 million. The machinery can be sold to the Romulans today for $6.2 million. Klingon’s current balance sheet shows net fixed assets of $2.8 million, current liabilities of $710,000, and net working capital of $130,000. If all the current assets were liquidated today, the company would receive $825,000 cash. What is the market value of Klingons assets?

Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $4.0 million. The machinery can be sold to the Romulans today for $6.2 million. Klingon’s current balance sheet shows net fixed assets of $2.8 million, current liabilities of $710,000, and net working capital of $130,000. If all the current assets were liquidated today, the company would receive $825,000 cash. What is the market value of Klingons assets?

Explanation / Answer

Market value of klingons assets = Sale proceeds receivable on sale of fixed assets + Sale proceeds receivable on sale of current assets

=6200000+825000 i.e 7025000

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