A delivery company purchased a bunch of new trucks three years ago for $6 million. These trucks can be sold today for $5.3 million. The delivery company's current balance sheet shows net fixed assets of $3.2 million, current liabilities of $900,000, and net working capital of $215,000. If all the current assets were sold today and converted into cash, the delivery company would receive $1.25 million.

Calculate the book value of the delivery company's total assets today.

Question

Josue Larson

Business

22 May, 09:36

A delivery company purchased a bunch of new trucks three years ago for $6 million. These trucks can be sold today for $5.3 million. The delivery company's current balance sheet shows net fixed assets of $3.2 million, current liabilities of $900,000, and net working capital of $215,000. If all the current assets were sold today and converted into cash, the delivery company would receive $1.25 million.

Calculate the book value of the delivery company's total assets today.

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Answers (1)

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Joyce · Answer 1

The net book value of the company = $3,415,000

Explanation:

The historical cost concept states that assets should be stated at their historical cost. Under this concept, the value of a company is the the net-book value of its assets. The net book value of an asset is its historical cost less the accumulated depreciation to date.

The book value of the delivery company

Net fixed assets $3, 200,000

Net working capital $215,000

Total book value $3,415,000

The net book value of the company = $3,415,000