Brad's Co. has equipment with a book value of $500 that could be sold today at a 50 % discount. Their inventory is valued at $400 and could be sold to a competitor for that amount. The firm has $50 in cash and customers owe them $300. What is the accounting value of their liquid assets?

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Quizplus · Accepted Answer

Liquid assets are those that can be quickly converted into cash without significant loss of value. In this case, Brad's Co. has $50 in cash (already liquid), $400 in inventory that can be sold for that amount, and $300 owed by customers. The equipment, despite its book value of $500 and potential sale at a 50% discount ($250), is not typically considered a liquid asset due to the time and effort required to sell it. Therefore, the accounting value of their liquid assets is $50 (cash) + $400 (inventory) + $300 (receivables) = $750.

Brad's Co Has Equipment with a Book Value of $500 That