**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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Culver Company owns specialized equipment that was purchased in an acquisition of Riding Company. The equipment has a book value of $1,560,000, but according to IFRS it is assessed for impairment on an annual basis. To perform this impairment test, Culver must estimate the fair value of the equipment. It has developed the following cash flow estimates related to the equipment based on internal information. Each cash flow estimate reflects Culver's estimate of annual cash flows over the next 7 years. The equipment is assumed to have no residual value after the 7 years. (Assume the cash flows occur at the end of each year.) Year Cash Flow Estimate 1-3 4-6 7 $208,000 316,000 368,000 Culver determines, using its own assumptions, that the appropriate discount rate for this estimation is 6%. What is the estimated fair value of the equipment? (Round answer to 0 decimal places, eg. 5,275. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Click here to…
E12-14 (Algo) (Supplement B) Computing and Reporting Cash Flow Effects of the Sale of Equipment During the period, Sanchez Company sold some excess equipment at a loss. The following information was collected from the company's accounting records: From the Income Statement Depreciation expense Loss on sale of equipment From the Balance Sheet Beginning equipment Ending equipment $ 840 4,300 20,700 10,700 1,980 1,790 Beginning accumulated depreciation Ending accumulated depreciation No new equipment was bought during the period. Required: 1. For the equipment that was sold, determine its original cost, its accumulated depreciation, and the cash received from the sale. (Use the equipment and accumulated depreciation T-accounts to infer the book value of the equipment sold.) 2. Sanchez Company uses the indirect method for the Operating Activities section of the cash flow statement. What amount related to the sale would be added or subtracted in the computation of Net Cash Flows from…
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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…
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