Question

Klingon Cruisers, 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. What is the book value of Klingon's assets today? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars

Answer 1

book value of the assets: 6,979,000 dollars

Step-by-step explanation:

As we are asked for the book value, we should ignore market value of fixed and current asset and only consider the accounting values.

fixed assets balance sheet: 6,000,000

net working capital: current assets - current liabilities

219,000 = current assets - 760,000

current assets = 219,000 + 760,000 = 979,000

total book value of the assets: 6,000,000 + 979,000 = 6,979,000