The Widget Co.purchased new machinery three years ago for $4 million.The machinery can be sold to the Roman Co.today for $2 million.The Widget Co.'s current balance sheet shows net fixed assets of $2,500,000,current liabilities of $1,375,000,and net working capital of $725,000.If all the current assets were liquidated today,the company would receive $1.9 million in cash.The book value of the Widget Co.'s assets today is _____ and the market value of those assets is _____.
A)$4,600,000; $3,900,000
B)$4,600,000; $3,125,000
C)$5,000,000; $3,125,000
D)$5,000,000; $3,900,000
E)$6,500,000; $3,900,000

Question

Quizplus · Accepted Answer

Book value = ($725,000 + $1,375,000) + $2,500,000 = $4,600,000Market value = $1,900,000 + $2,000,000 = $3,900,000