Klingon Widgets, Incorporated, purchased new cloaking machinery three years ago for $4.8 million. The machinery can be sold to the Romulans today for $7 million. Klingon’s current balance sheet shows net fixed assets of $3.6 million, current liabilities of $790,000, and net working capital of $138,000. If all the current accounts were liquidated today, the company would receive $905,000 cash.What is the book value of Klingon’s total assets today?Note: Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.What is the sum of the market value of NWC and the market value of fixed assets?Note: Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.



### 1. **Book Value of Total Assets Today:**

To calculate the book value of Klingon’s total assets, we need to add up the net fixed assets and the net working capital (NWC).

From the information provided:
- **Net fixed assets**: \$3.6 million
- **Current liabilities**: \$790,000
- **Net working capital (NWC)**: \$138,000

The formula for **NWC** is:

\[
\text{NWC} = \text{Current Assets} - \text{Current Liabilities}
\]

This means the **Current Assets** can be calculated as:

\[
\text{Current Assets} = \text{NWC} + \text{Current Liabilities} = 138,000 + 790,000 = 928,000
\]

Now, the **book value of total assets** is the sum of the net fixed assets and the current assets:

\[
\text{Book Value of Total Assets} = \text{Net Fixed Assets} + \text{Current Assets}
\]

\[
\text{Book Value of Total Assets} = 3,600,000 + 928,000 = 4,528,000
\]

So, the **book value of total assets today** is \$4,528,000.

---

### 2. **Sum of Market Value of NWC and Market Value of Fixed Assets:**

- **Market value of NWC**: The cash received if current accounts were liquidated is given as \$905,000.
- **Market value of fixed assets**: The machinery can be sold for \$7,000,000.

The sum of the market value of NWC and the market value of fixed assets is:

\[
\text{Market Value (NWC + Fixed Assets)} = 905,000 + 7,000,000 = 7,905,000
\]

So, the **sum of the market value of NWC and fixed assets** is \$7,905,000.

---

Would you like more details or further clarification on any steps?

Here are five related questions to consider:
1. How is the market value of net working capital typically calculated?
2. What factors can cause the book value and market value of fixed assets to differ?
3. How are current liabilities typically treated when calculating net working capital?
4. Why might a company’s market value of assets be higher than the book value?
5. How does the sale of fixed assets affect the balance sheet?

**Tip**: The difference between book value and market value provides insights into the company’s depreciation practices and market perception of asset value.

Klingon Widgets, Incorporated, purchased new cloaking machinery three years ago for $4.8 million. The machinery can be sold to the Romulans today for $7 million. Klingon’s current balance sheet shows net fixed assets of $3.6 million, current liabilities of $790,000, and net working capital of $138,000. If all the current accounts were liquidated today, the company would receive $905,000 cash. What is the book value of Klingon’s total assets today? What is the sum of the market value of NWC and the market value of fixed assets?

Learn how to calculate Klingon Widgets' book value of total assets and the sum of the market value of net working capital (NWC) and fixed assets. Using key financial formulas, understand the difference between book and market value for this specific problem, suitable for finance and accounting students.

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