Cougar Inc. has total fixed assets of $800 million, total equity of $416 million, current liabilities of $328 million, and long-term liabilities of $590 million. Given this information, what does Cougar Inc. have in current assets?

Question

BlackTom AI · Accepted Answer

To tackle this problem, start by organizing what you know about Cougar Inc.'s financial structure.

First, calculate total liabilities: current liabilities plus long-term liabilities = 328 million + 590 million = 918 million. 
Next, use the basic accounting equation: Assets = Liabilities + Equity. With total equity at 416 million, total assets = 918 million + 416 million = 1334 million. 
Now, distinguish between total assets and current assets. Since fixed assets are given as 800 million, current assets = total assets − fixed assets = 1334 million − 800 million = 534 million.

Evaluate each answer option in light of these steps:
- Option "$1334 million": This represents total assets, not current assets, so it misidentifies the portion tied up in fixed and current assets. 
- Option "$534 million": This matches the computed current assets exactly, aligning with the breakdown of total assets and fixed assets. 
- Option "$328 million": This equals only the current liabilities, not the asset side of the balance sheet, so it cannot be current assets. 
- Option "$672 million": This figure does not directly correspond to either total assets or a straightforward component (like current assets, fixed assets, or liabilities) given the provided data, so it’s inconsistent with the balance sheet relationships.

In summary, by subtracting fixed assets from total assets derived from the liabilities and equity, you obtain the current assets value of 534 million. This aligns with the standard balance sheet identity and the given numbers.

MSB-250-300-002 Proctored Midcourse Exam 1

Cougar Inc. has total fixed assets of $800 million, total equity of $416 million, current liabilities of $328 million, and long-term liabilities of $590 million. Given this information, what does Cougar Inc. have in current assets?

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