Answer:
1) Book Value= $16,464,000
2) Market Value = $19,080,000
Explanation:
The first question is to determine the book value of Klingon's assets today. Book value is the carrying value of the business in its balance sheet.
Book Value = Net working Capital + Current Liabilities + Net Fixed Assets
Net working Capital= $226,000
Current Liabilities= $700,000
Net Fixed Assets= $15,500,000
Book Value = $226,000+ $700,000+$15,500,000= $16,464,000
2) Calculate the market value
The formula for market value = How much the machinery was sold to Romulans today+ today's value of the current assets if they are liquidated
The market value of assets is a function of the current market price they can be sold for and received on the day of the valuation
Market Value= $18,000,000 + $1,080,000= $19,080,000
