Four years ago, Ship Express purchased a mailing machine at a cost of $218,000. This equipment is currently valued at $97,400 on today's balance sheet but could actually be sold for $92,900. This is the only fixed asset the firm owns. Net working capital is $41,300 and long-term debt is $102,800. What is the book value of shareholders' equity?

Question

Quizplus · Accepted Answer

The book value of shareholders' equity can be calculated by subtracting total liabilities from total assets. 
Total assets = value of mailing machine ($97,400) + net working capital ($41,300) = $138,700 
Total liabilities = long-term debt ($102,800) 
Book value of shareholders' equity = total assets - total liabilities = $138,700 - $102,800 = $35,900

Four Years Ago, Ship Express Purchased a Mailing Machine at a Cost