{"id":195259,"date":"2025-02-28T05:37:05","date_gmt":"2025-02-28T05:37:05","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=195259"},"modified":"2025-02-28T05:37:08","modified_gmt":"2025-02-28T05:37:08","slug":"klingon-widgets-inc-purchased-new-cloaking-machinery-three-years-ago-for-4-9-million","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/02\/28\/klingon-widgets-inc-purchased-new-cloaking-machinery-three-years-ago-for-4-9-million\/","title":{"rendered":"Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $4.9 million"},"content":{"rendered":"\n
Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $4.9 million. The machinery can be sold to the Romulans today for $7.1 million. Klingon’s current balance sheet shows net fixed assets of $3.7 million, current liabilities of $800,000, and net working capital of $139,000. If all the current assets were liquidated today, the company would receive $915,000 cash. (Enter your answer as directed, but do not round intermediate calculations.)<\/p>\n\n\n\n
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.)<\/p>\n\n\n\n
Total asset book value $<\/p>\n\n\n\n
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.)<\/p>\n\n\n\n
Total asset market value $<\/p>\n\n\n\n
The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n
Solution Explanation<\/strong><\/h3>\n\n\n\n
Requirement 1: Book Value of Total Assets<\/strong><\/h4>\n\n\n\n
The book value of Klingon Widgets, Inc.’s total assets is calculated as:<\/p>\n\n\n\n
So, the book value of total assets<\/strong> is $4,639,000<\/strong>.<\/p>\n\n\n\n\n\n\n\n
Requirement 2: Market Value of Total Assets<\/strong><\/h4>\n\n\n\n
The market value of the total assets considers the market value of the fixed assets (machinery) and the actual liquidation value of current assets:<\/p>\n\n\n\n
[ \\text{Total Assets (Market Value)} = \\text{Market Value of Fixed Assets} + \\text{Market Value of Current Assets} ]<\/p>\n\n\n\n
[ = 7,100,000 + 915,000 ]<\/p>\n\n\n\n
[ = 8,015,000 ]<\/p>\n\n\n\n
So, the market value of total assets<\/strong> is $8,015,000<\/strong>.<\/p>\n\n\n\n\n\n\n\n
Explanation<\/strong><\/h3>\n\n\n\n
\n
The book value reflects the historical cost of assets minus depreciation, while the market value reflects what the assets can actually be sold for today.<\/li>\n\n\n\n
The net fixed assets have depreciated on the books to $3.7 million<\/strong>, but the machinery has appreciated in market value and can be sold for $7.1 million<\/strong>.<\/li>\n\n\n\n
The company has $915,000<\/strong> in current assets based on liquidation, whereas the book value of current assets is $800,000 (liabilities) + $139,000 (working capital) = $939,000<\/strong>.<\/li>\n\n\n\n
The significant difference between book and market values highlights the appreciation of fixed assets and differences in working capital.<\/li>\n<\/ul>\n\n\n\n
Now, I will generate an image representing this financial breakdown.<\/p>\n\n\n\n<\/figure>\n\n\n\n
Here is a financial analysis chart comparing the book value and market value of Klingon Widgets, Inc.’s total assets. Let me know if you need any modifications or further insights!<\/p>\n","protected":false},"excerpt":{"rendered":"
Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $4.9 million. The machinery can be sold to the Romulans today for $7.1 million. Klingon’s current balance sheet shows net fixed assets of $3.7 million, current liabilities of $800,000, and net working capital of $139,000. If all the current assets were liquidated today, the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-195259","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/195259","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=195259"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/195259\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=195259"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=195259"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=195259"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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<\/figure>\n\n\n\n