IDNLearn.com: Where your questions meet expert advice and community support. Ask your questions and receive reliable and comprehensive answers from our dedicated community of professionals.

The Widget Co. purchased new machinery three years ago for $4 million. The machinerycan be sold to the Roman Co. today for $2 million. The Widget Co.'s current balance sheetshows net fixed assets of $2,500,000, current liabilities of $1,375,000, and net working capitalof $725,000. If all the current assets were liquidated today, the company would receive $1.9million in cash. The book value of the Widget Co.'s assets today is _____ and the marketvalue of those assets is _____.
A. $4,600,000; $3,900,000
B. $4,600,000; $3,125,000
C. $5,000,000; $3,125,000
D. $5,000,000; $3,900,000
E. $6,500,000; $3,900,000


Sagot :

Answer: A. $4,600,000; $3,900,000

Explanation:

Based on the information that have been provided in the question, the book value will be calculated as:

= Net working capital + Current liabilities + Net fixed assets

= $725,000 + $1,375,000 + $2,500,000

= $4,600,000

Market value will be:

= $1,900,000 + $2,000,000

= $3,900,000

Therefore, the answer is option A.

We value your participation in this forum. Keep exploring, asking questions, and sharing your insights with the community. Together, we can find the best solutions. Your questions find clarity at IDNLearn.com. Thanks for stopping by, and come back for more dependable solutions.