Question

Net fixed assets: Book value: $2,500, Market value: $3,000 Net working capital: $700 Current accounts liquidated: $1,500 ABC Corporation has $900 in long-term debt. What is the book value of equity?

Answer 1

$2,300

Step-by-step explanation:

The book value is $2,500

The market value is $3,000

The net working capital is $700

The current account that was liquidated is $1,500

The long term debt of ABC corporation is $900

Book value of equity = book value of assets - book value of liabilities

The first step is to calculate the book value of assets

= net working capital + net fixed assets

= $700 + $2500

= $3,200

The book value of liabilities can be calculated as follows

= long term debt which is $900

Therefore the book value of equity can be calculated as follows

= $3,200 - $900

= $2,300

Hence the book value of equity is $2,300