Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $4.7 million. The machinery can be sold to the Romulans today for $6.9 million. Klingon’s current balance sheet shows net fixed assets of $3.5 million, current liabilities of $780,000, and net working capital of $137,000. If all the current assets were liquidated today, the company would receive $895,000 cash. (Enter your answer as directed, but do not round intermediate calculations.) Requirement 1: What is the book value of Klingon’s total assets today? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) Total asset book value $ Requirement 2: What is the market value of Klingon's total assets? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) Total asset market value $ Explanation: To find the book value of assets, we first need to find the book value of current assets. We are given the NWC. NWC is the difference between current assets and current liabilities, so we can use this relationship to find the book value of current assets. Doing so, we find: NWC = Current assets – Current liabilities Current assets = $137,000 + 780,000 = $917,000 Now we can construct the book value of assets. Doing so, we get: Book value of assets Current assets $ 917,000 Fixed assets 3,500,000 Total assets $ 4,417,000 All of the information necessary to calculate the market value of assets is given, so: Market value of assets Current assets $ 895,000 Fixed assets 6,900,000 Total assets $ 7,795,000

Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $4.7 million. The machinery can be sold to the Romulans today for $6.9 million. Klingon’s current balance sheet shows net fixed assets of $3.5 million, current liabilities of $780,000, and net working capital of $137,000. If all the current assets were liquidated today, the company would receive $895,000 cash. (Enter your answer as directed, but do not round intermediate calculations.)

Requirement 1:

What is the book value of Klingon’s total assets today? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)

Total asset book value

$

Requirement 2:

What is the market value of Klingon's total assets? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)

Total asset market value

$

Explanation:

To find the book value of assets, we first need to find the book value of current assets. We are given the NWC. NWC is the difference between current assets and current liabilities, so we can use this relationship to find the book value of current assets. Doing so, we find:

NWC = Current assets – Current liabilities

Current assets = $137,000 + 780,000 = $917,000

Now we can construct the book value of assets. Doing so, we get:

Book value of assets
Current assets	$	917,000
Fixed assets		3,500,000
Total assets	$	4,417,000

All of the information necessary to calculate the market value of assets is given, so:

Market value of assets
Current assets	$	895,000
Fixed assets		6,900,000
Total assets	$	7,795,000