Current Attempt in Progress Sarasota 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, Sarasota 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 Sarasota's estimate of annual cash flows over the next 9 years. The trade name is assumed to have no salvage value after the 9 years. (Assume the cash flows occur at the end of each year) Cash Flow Estimate Probability Assessment $380,600 646,900 768,300 20% 50% Estimated fair value $ 30% Click here to view factor tables. (a) What is the estimated fair value of the trade name? Sarasota determines that the appropriate discount rate for this estimation is 9%. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, eg. 458,581)

Current Attempt in Progress Sarasota 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, Sarasota 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 Sarasota's estimate of annual cash flows over the next 9 years. The trade name is assumed to have no salvage value after the 9 years. (Assume the cash flows occur at the end of each year) Cash Flow Estimate Probability Assessment $380,600 646,900 768,300 20% 50% Estimated fair value $ 30% Click here to view factor tables. (a) What is the estimated fair value of the trade name? Sarasota determines that the appropriate discount rate for this estimation is 9%. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, eg. 458,581)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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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…
"IFRS 10 Consolidated Financial Statements states that there are few ways to ascertain if the investor 'controls' and 'influences' its investees." Evaluate the statement above with reference to any applicable accounting standard and demonstrate the application of IFRS 10 Consolidated financial statements with the scenario provided below. Further, you must prepare a simplified consolidated statement of financial position as at 31st December 2020 а. to support your demonstration. Scenario: P acquires 100% of S's ordinary shares for RM1,500,000 on 31st December 2018. S's reserves (consists of only retained earnings) were RM 400,000 at the date of acquisition. The following presents the statement of financial position of both companies as at 31st December 2020. P S Notes RM RM As at 31st Dec 2020 000. *000 Non-current assets: Property, Plant and equipment Goodwill 2,000 1,000 Investment in S 1,500 Net current asset 300 200 3,800 1,200 Share capital 300 800 Retained earnings 3,500 400 3,800…
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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?
At the end of 2020, Bonita Company is conducting an impairment test and needs to develop a fair value estimate for machinery used in its manufacturing operations. Given the nature of Bonita's production process, the equipment is for special use. (No secondhand market values are available.) The equipment will be obsolete in 2 years, and Bonita's accountants have developed the following cash flow information for the equipment. Year 2021 2022 2022 Net Cash Flow Estimate $5,440 9,500 $(460) 2,180 3,800 Scrap value $530 970 Probability Assessment 40% Click here to view factor tables 60% 20% 60% 20% 50% 50% Using expected cash flow and present value techniques, determine the fair value of the machinery at the end of 2020. Use a 6% discount rate. Assume all cash flows occur at the end of the year. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Sair Fair value of the machinery at the end of 2020 $
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On January 1, 2010, P Company acquired the net assets of S Company for $1,580,000 cash. The fair value of S Co. identifiable net assets was $1,310,000 on this date. P Company decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting unit (S Co.). The information for these subsequent years is as follows: Carrying value of S Co. Identifiable Net Assets $1,160,000 $1,120,000 Fair Value SCo. Identifiable Net Assets $1,190,000 $1,210,000 Present value of Future Cash Flows $1,390,000 $1,400,000 * Identifiable net assets do not include goodwill. Year 2011 2012 Choose the correct answer: In year 2011 S Company had: * Excess of fair value over carrying value of $30,000 Excess of carrying value over fair value of $30,000 Excess of fair value over carrying value of $40,000 Excess of carrying value over fair value of $40,000 None of the options is correct
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…
Munabhai
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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