Brad's Company has equipment with a book value of $500 that could be sold today at a 50% discount. Its inventory is valued at $450 and could be sold to a competitor for that amount. The firm has $100 in cash and customers owe it $250. What is the accounting value of its liquid assets?

Question

Quizplus · Accepted Answer

To calculate the accounting value of the liquid assets, we need to consider only those assets that can be easily and quickly converted into cash. In this case, the cash and the accounts receivable qualify as liquid assets. 
Cash = $100
Accounts receivable = $250
Total liquid assets = $100 + $250 = $350 
Note that we cannot include the discounted value of equipment or the value of inventory as these are not easily convertible into cash without significant time and effort. Therefore, the accounting value of liquid assets is $350.

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