Homework Help is Here – Start Your Trial Now!
Business
Accounting
any owns trade name that was in an acquis pany. $3,700,000, but according to IFRS, it must be assessed for impairment on an annual basis. To perform this impairment test, Crane must estimate the fair value of the trade name (using IFRS 13). It has developed the following cash flow estimates related to the trade name based on internal information. Each cash flow estimate reflects Crane's estimate of annual cash flows over the next 8 years. The trade name is assumed to have no residual value after the 8 years. (Assume the cash flows occur at the end of each year.) Cash Flow Estimate $380,500 637,500 743,000 Probability Assessment 20 % 50 % 30 % Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.

any owns trade name that was in an acquis pany. $3,700,000, but according to IFRS, it must be assessed for impairment on an annual basis. To perform this impairment test, Crane must estimate the fair value of the trade name (using IFRS 13). It has developed the following cash flow estimates related to the trade name based on internal information. Each cash flow estimate reflects Crane's estimate of annual cash flows over the next 8 years. The trade name is assumed to have no residual value after the 8 years. (Assume the cash flows occur at the end of each year.) Cash Flow Estimate $380,500 637,500 743,000 Probability Assessment 20 % 50 % 30 % Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

9

Crane Company owns a trade name that was purchased in an acquisition of Sheridan Company. The trade name has a book value of $3,700,000, but according to IFRS, it must be assessed for impairment on an annual basis. To perform this impairment test, Crane must estimate the fair value of the trade name (using IFRS 13). It has developed the following cash flow estimates related to the trade name based on internal information. Each cash flow estimate reflects Crane's estimate of annual cash flows over the next 8 years. The trade name is assumed to have no residual value after the 8 years. (Assume the cash flows occur at the end of each year.) Cash Flow Estimate $380,500 637,500 743,000 Probability Assessment 20 % 50 % 30 % Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. A fo) What is the estimated fair value of the trade name? Crane determines that the appropriate discount rate for this estimation is 8%.
Transcribed Image Text:Crane Company owns a trade name that was purchased in an acquisition of Sheridan Company. The trade name has a book value of $3,700,000, but according to IFRS, it must be assessed for impairment on an annual basis. To perform this impairment test, Crane must estimate the fair value of the trade name (using IFRS 13). It has developed the following cash flow estimates related to the trade name based on internal information. Each cash flow estimate reflects Crane's estimate of annual cash flows over the next 8 years. The trade name is assumed to have no residual value after the 8 years. (Assume the cash flows occur at the end of each year.) Cash Flow Estimate $380,500 637,500 743,000 Probability Assessment 20 % 50 % 30 % Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. A fo) What is the estimated fair value of the trade name? Crane determines that the appropriate discount rate for this estimation is 8%.
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting Changes and Error Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS