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Sunland Company owns a trade name that was purchased in an acquisition of Blossom Company. The trade name has a book value of $3,800,000, but according to IFRS, it is assessed for impairment on an annual basis. To perform this impairment test, Sunland 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. Eachgash flow estimate reflects Sunland's estimate of annual cash flows over the next 10 years. The trade name is assumed to have no salvage value after the 10 years. (Assume the cash flows occur at the end of each year) Cash Flow Estimate Probability Assessment $383,000 631,000 747,000 Click here to vie 20 % 50 % 30 % factor table PRESENT VALUE OF 1 PRESENT VALUE OF AN ANNUITY OF 1

Sunland Company owns a trade name that was purchased in an acquisition of Blossom Company. The trade name has a book value of $3,800,000, but according to IFRS, it is assessed for impairment on an annual basis. To perform this impairment test, Sunland 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. Eachgash flow estimate reflects Sunland's estimate of annual cash flows over the next 10 years. The trade name is assumed to have no salvage value after the 10 years. (Assume the cash flows occur at the end of each year) Cash Flow Estimate Probability Assessment $383,000 631,000 747,000 Click here to vie 20 % 50 % 30 % factor table PRESENT VALUE OF 1 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
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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) What is the estimated fair value of the trade name? Sunland determines that the appropriate discount rate for this estimation is 10%. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answer to 0 decimal places, e.g. 5,275.) Estimated fair value S eTextbook and Media Save for Later Attempts: 0 of 2 used Submit Amer
Transcribed Image Text: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) What is the estimated fair value of the trade name? Sunland determines that the appropriate discount rate for this estimation is 10%. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answer to 0 decimal places, e.g. 5,275.) Estimated fair value S eTextbook and Media Save for Later Attempts: 0 of 2 used Submit Amer
Sunland Company owns a trade name that was purchased in an acquisition of Blossom Company. The trade name has a book value of $3,800,000, but according to IFRS, it is assessed for impairment on an annual basis. To perform this impairment test, Sunland 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. Eachgash flow estimate reflects Sunland's estimate of annual cash flows over the next 10 years. The trade name is assumed to have no salvage value after the 10 years. (Assume the cash flows occur at the end of each year) Cash Flow Estimate $383.000 631,000 747.000 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
Transcribed Image Text:Sunland Company owns a trade name that was purchased in an acquisition of Blossom Company. The trade name has a book value of $3,800,000, but according to IFRS, it is assessed for impairment on an annual basis. To perform this impairment test, Sunland 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. Eachgash flow estimate reflects Sunland's estimate of annual cash flows over the next 10 years. The trade name is assumed to have no salvage value after the 10 years. (Assume the cash flows occur at the end of each year) Cash Flow Estimate $383.000 631,000 747.000 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
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