Question

Klingon Cruisers, Inc., purchased new cloaking machinery three years ago for $9 million. The machinery can be sold to the Romulans today for $8.2 million. Klingon's current balance sheet shows net fixed assets of $6.1 million, current liabilities of $740,000, and net working capital of $218,000. If all the current accounts were liquidated today, the company would receive $1 million cash.

a. What is the book value of Klingon's assets today? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
b. What is the sum of the NWC and the market value of fixed assets? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

Answer 1

Book value of total assets = $7,058,000

Market value of fixed assets = $8,016,000

Step-by-step explanation:

Net Working Capital = current assets - current liabilities

Current Assets = current liabilities + NWC

= $740,000+$218,000

=958,000

Net fixed assets = $6,100,000

Book value of total assets = $7,058,000

Market value of NWC:

Current Assets =$7,058,000

Current Liabilities =$740,000

Market Value of NWC = $218,000

Market value of fixed assets = $8,016,000