Question

Klingon Cruisers, Inc., purchased new cloaking machinery three years ago for $15 million. The machinery can be sold to the Romulans today for $14.1 million. Klingon's current balance sheet shows net fixed assets of $12 million, current liabilities of $860,000, and net working capital of $224,000. If all the current accounts were liquidated today, the company would receive $1.06 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, e.g., 1,234,567.) Book value of total assets What is the sum of the market value of NWC and the market value of fixed assets? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) Sum of the market value of NWC and market value of fixed assets

Answer 1

Answer:

a)

book value of fixed assets = $12,000,000

current liabilities = $860,000

net working capital = current assets - current liabilities = $224,000

current assets = $860,000 + $224,000 = $1,084,000

book value of total assets = $12,000,000 (fixed assets) + $1,084,000 (current assets) = $13,084,000

b)

current resale value of cloaking machine = $14,100,000

market value of current assets = $1,060,000

market value of total assets = $14,100,000 (fixed assets) + $1,060,000 (current assets) = $15,160,000