Sam Coronado Company owns a trade name that was purchased in an acquisition of Travis Company. The trade name has a book valu of $10,000,000, but according to GAAP, it is assessed for impairment on an annual basis. To perform this impairment test, Coronado 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 Coronado's estimate of annual cash flows over the next 8 years. The trade nam 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 $1,050,000 Probability Assessment 30% 1,470,000 50% 1,900,000 20% Click here to view factor tables (a) What is the estimated fair value of the trade name? Coronado determines that the appropriate discount rate for this estimation is 4%. (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 $

Sam Coronado Company owns a trade name that was purchased in an acquisition of Travis Company. The trade name has a book valu of $10,000,000, but according to GAAP, it is assessed for impairment on an annual basis. To perform this impairment test, Coronado 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 Coronado's estimate of annual cash flows over the next 8 years. The trade nam 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 $1,050,000 Probability Assessment 30% 1,470,000 50% 1,900,000 20% Click here to view factor tables (a) What is the estimated fair value of the trade name? Coronado determines that the appropriate discount rate for this estimation is 4%. (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 $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

Note:-

Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.

Sam Coronado Company owns a trade name that was purchased in an acquisition of Travis Company. The trade name has a book value
of $10,000,000, but according to GAAP, it is assessed for impairment on an annual basis. To perform this impairment test, Coronado
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 Coronado'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
Probability Assessment
$1,050,000
30%
1,470,000
50%
1,900,000
20%
Click here to view factor tables
(a) What is the estimated fair value of the trade name? Coronado determines that the appropriate discount rate for this estimation
is 4%. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.)
Estimated fair value
$
+A
SUP

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