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24 February, 15:58

Klingon Widgets, 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 assets and current liabilities were liquidated today, the company would receive $1.06 million cash. a. What is the book value of Klingon's total assets today

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  1. 24 February, 17:45
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    Answer: $13,084,000

    Explanation:

    Given that,

    Cost of new cloaking machinery = $15 million

    Machinery can be sold to the Romulans today = $14.1 million

    Net fixed assets = $12 million

    Current liabilities = $860,000

    Net working capital = $224,000

    Net working capital = Current assets - Current liabilities

    $224,000 = Current assets - $860,000

    Current assets = $1,084,000

    Therefore, book value of current assets is $1,084,000.

    Book value of total assets = Book value of net fixed assets + Book Value of Current assets

    = 12,000,000 + 1,084,000

    = $13,084,000
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