**Current Attempt in Progress**Bridgeport Company owns a trade name that was purchased in an acquisition of McClellan Company. The trade name has a book value of $3,500,000, but according to GAAP, it is assessed for impairment on an annual basis. To perform this impairment test, Bridgeport must estimate the fair value of the trade name. It has developed the following cash flow estimates related to the trade name based on internal information. Each cash flow estimate reflects Bridgeport’s estimate of annual cash flows over the next 12 years. The trade name is assumed to have no salvage value after the 12 years. (Assume the cash flows occur at the end of each year.)| Cash Flow Estimate | Probability Assessment ||--------------------|------------------------|| $380,500 | 20% || $631,600 | 50% || $768,800 | 30% |**Click here to view factor tables****(a)** What is the estimated fair value of the trade name? Bridgeport determines that the appropriate discount rate for this estimation is 12%. *(Round factor values to 5 decimal places, e.g., 1.25124 and final answer to 0 decimal places, e.g., 458,581.)***Estimated fair value** $ _______[Save for Later] Attempts: 0 of 1 used [Submit Answer]

solution : we are required to calculate the fair value of trade name given Cash flow estimate…

Answered: Bridgeport Company owns a trade name…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Fitzgerald Inc. uses IFRS and accounts for their property plant & equipment at amortized cost. Fitzgerald has a cash generating unit, Small Division, with a very unique business. Small Division has the following carrying amounts at June 30, 2021, its year end: $ 2,000 30,000 5,800 Land Building Equipment At June 30, 2021, the undiscounted future cash flows from operation and disposal of the division are estimated to be $38,000 (present value $33,50O). The land could now be sold for $3,000 (net of costs) but no separate valuations can be done on the building and equipment as there is little market for them for standalone use. Required: a. Perform impairment testing for the Small Division and calculate any impairment loss. b. Prepare the journal entry resulting from (a) c. Would your answer change if Fitzgerald reported under ASPE? How & Why?
Sensitive Company paid P500,000 and gave a plot of undeveloped land with a carrying amount of P3,200,000 and a fair value of P4,500,000 to another entity in exchange for a plot of undeveloped land with a fair value of P5,000,000. The land was carried on the other entity's books at P3,500,000. The configuration of cash flows from the land acquired is expected to be significantly different from the configuration of cash flows of the land exchanged. What amount should be recognized as carrying amount of land received in exchange by Sensitive Company?
RCG Company, purchased machinery to be used in production forP6,500,000 on April 1, 2017. The machine had a 5-year life, P500,000 residual value, and was depreciated using the double declining balance method. On January 1, 2020 a test forimpairment indicated that the undiscounted cash flows from the machine are less than its carrying value. The machine's value in use on January 1, 2020 is P1,100,000. 1. What is the loss on impairment?
YSA Inc. provided the following information on December 31, 2021: Cash 5,000,000 Financial assets at fair value through profit or loss, including cost of P500,000 of YSA Inc. 2,500,000 Accounts receivable 3,000,000 Inventory 1,000,000 Land 30,000,000 Equipment 10,000,000 Accumulated depreciation - equipment 6,000,000 Building 40,000,000 Accumulated depreciation - building 14,000,000 Furniture and Fixtures 15,000,000 Accumulated depreciation - Furniture and Fixtures 3,900,000 Accounts payable, after deducting debit balances in supplier's accounts amounting to P200,000 4,500,000 Accrued expenses payable 500,000 Bonds payable, due December 31, 2022 3,500,000 Discount on bonds payable 500,000 Deferred tax liability 300,000 Dividends payable 400,000 Credit balances of customers' accounts 50,000 Share dividend payable 200,000 15% note payable issued on July 1, 2020, maturing on July 1, 2022 6,000,000 20% note payable issued on August 31, 2020, maturing on August 31, 2021 3,000,000…
On January 1, 2020, due to the unexpected advances in technology, Claro Co. realized that its machinery has been impaired. The unit was purchased on January 1, 2016 for P20,000,000. The entity initially estimated that the asset has a useful life of 20 years with no residual value. On that date, the fair value of the asset was P10,000,000. The cash inflows and outflows to be derived from the asset from its continuing use are as follows: End of year Cash inflow Cash outflow 2020 7,500,000 3,500,000 2021 6,000,000 3,000,000 2022 4,000,000 2,000,000 2023 3,000,000 1,500,000 2024 2,500,000 1,000,000 Should the entity decide to continue to use the asset, remaining life will be 5 years. The discount rate used by the entity is 10%. How much is the impairment loss to be recognized on January 1, 2020?
Swifty Corporation owns machinery with a book value of $575000. It is estimated that the machinery will generate future cash flows of $607000. The machinery has a fair value of $429000. Swiftyshould recognize a loss on impairment of $151750. $ -0-. $178000. $32000.
Summer Inc has machine with a carrying value of 450,000 on December 31, 2021. The following information was available on December 31, 2021: · Expected net cash flows (undiscounted)- P420,000 · Expected net cash flows discounted at 7%- P400,000 · Fair value, using the assets with other assets- P415,000 · Fair value, assuming the assets are sold stand-alone- P428,000 What is the impairment loss that SUmmer Inc must report in its 2021 income statement for this machine?
The information that follows relates to equipment owned by Coronado Limited at December 31, 2023: Cost Accumulated depreciation to date Expected future net cash flows (undiscounted) Expected future net cash flows (discounted, value in use) Fair value Costs to sell (costs of disposal) $7,920,000 880,000 6,160,000 5,588,000 5,456,000 44,000 At December 31, 2023, Coronado discontinues use of the equipment and intends to dispose of it in the coming year by selling it to a competitor. It is expected that the costs of disposal will total $44,000.
The land that Martin Company paid $81,000 to purchase in the prior year had an appraised market value of $112,000 at the end of the current reporting period. Which of the following shows how the change in market value will affect the company's accounting equation? The letters "NA" indicate that the component of the equation is not affected. A. B. C. D. Assets $ 81,000 $ 31,000 NA $ 112,000 =Liabilities + NA NA ΝΑ ΝΑ = = = = Common Stock NA NA NA ΝΑ Retained Earnings $ 81,000 $ 31,000 ΝΑ $ 112,000
On January 1, 2021, Bambi Ltd. purchased equipment for $728,000. The equipment was assumed to have an 8-year useful life and no residual value and was to be depreciated using the straight-line method. On January 1, 2023, Bambi's management became concernedthat the equipment may have become obsolete. Management calculated that the undiscounted future net cash flows from the equipment was $523,250, the discounted future net cash flows was $464,100, and the current fair value of the equipment less cost ofdisposal (of $1,800 ) was $455,000. c) Assuming that Bambi is a public Canadian company, identify which model should be used to test for impairment. d) Record the journal entry to record the impairment loss, if any. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit…
Ripley corporarion's accumulated depreciation - equipment account increased by 15325 while 3800 of patent amortization was recognized bewtween balance sheet dates. There were no purchases of sales of depreciation or intangible assets during the year. In addition the income statement showed a gain of 22420 from the salem of investments. Reconcile a net income of 286900 to net cash flow from operetatimg activities
4. YOU CAN DO IT Corporation has equipment with a carrying value of 450,000 on December 31, 2021. The following information was available on December 31, 2021: · Expected net cash flows (undiscounted)- P420,000 · Expected net cash flows discounted at 7%- P400,000 · Fair value, using the assets with other assets- P415,000 · Fair value, assuming the assets are sold stand-alone- P428,000 What is the impairment loss that the Company must report in its 2021 income statement for this equipment? CHOICES: P30,000 P35,000 P22,000 P50,000

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