Klingon Widgets, Inc., purchased new cloaking machinery five years ago for $10 m
ID: 2814449 • Letter: K
Question
Klingon Widgets, Inc., purchased new cloaking machinery five years ago for $10 million. The machinery can be sold to the Romulans today for $9.4 millon. Klingon's current balance sheet shows net fixed assets of $8 million, current llablties of $810,000, and net working capital of $247,000. If all the current assets and current lablities were liquidated today, the company would recelve $1.14 million cash. What Is the book value of Kllngon's total assets today? (Enter your answer In dollars, not millilons of dollers, 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 Intermedlate calculatlons. Enter your answer In dollars, not mililions of dollars, e.g., 1,234,567.) a. b. a. Book value of fixed assets b. Sum of the market value of NWC and market vslue of fixed assetsExplanation / Answer
a.
Current liabilities = $810,000
Net working capital = $247,000
Net working capital =Current assets - Current liabilities
$247,000 = Current assets - $810,000
Current assets = $247,000 + $810,000 = $1,057,000
Net fixed assets = $8 million = $8,000,000
Book value of total assets = Current assets + Net fixed assets = $1,057,000 + $8,000,000 = $9,057,000
b.
Market value of fixed assets = $9.4 million = $9,400,000
Market value of Net working capital = Net liquidated value of current assets and current liabilites = $1.14 million = $1,140,000
Sum of the market value of NWC and market value of fixed assets = $9,400,000 + $1,140,000 = $10,540,000
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