Question

Roscoe's fixed assets were purchased three years ago for $1.8 million. these assets can be sold to stewart's today for $1.2 million. roscoe's current balance sheet shows net fixed assets of $960,000, current liabilities of $348,000, and net working capital of $121,000. if all the current assets were liquidated today, the company would receive $518,000 cash. the book value of the firm's assets today is _____ and the market value is ____.

Answer 1

Book value of the assets is the amount at which it is shown in the balance sheet of the company. Market value of the assets is the total value of the assets the organization will receive if it is liquidated today.

Book value of firm’s total assets = Book value of firm’s current assets + Book value of firm’s fixed assets

= ($348,000 + $121,000) + $960,000

= $1,429,000

Market value of firm’s total assets = Market value of firm’s current assets + Market value of firm’s fixed assets

= $518,000 + $1,200,000

= $1,718,000