no plagiarism no copy paste give complete answer Blue 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, Blue mustestimate the fair value of the trade name. It has developed the following cash flow estimates related to the trade name based oninternal information. Each cash flow estimate reflects Blue's estimate of annual cash flows over the next 11 years. The trade name isassumed to have no salvage value after the 11 years. (Assume the cash flows occur at the end of each year)Cash Flow Estimate Probability Assessment$378,90020%649,40050%758.00030%Click here to view factor tables(a) What is the estimated fair value of the trade name? Blue determines that the appropriate discount rate for this estimation is 11%.(Round factor values to 5 decimal places, eg 1.25124 and final answer to 0 decimal places, eg 458,581.)Estimated fair value

Fair value is the estimated price at which an asset can be sold or a liability settled in an orderly…

Answered: Blue Company owns a trade name that was…

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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Crane Company owns a trade name that was purchased in an acquisition of Wildhorse Co.. The trade name has a book value of $2200000, but according to IFRS, it is assessed for impairment on an annual basis. To perform this impairment test, Crane 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 Crane's estimate of annual cash flows over the next 7 years. The trade name is assumed to have no residual value after the 7 years. (Assume the cash flows occur at the end of each year.) Probability Assessment Cash Flow Estimate 30% $250000 50% 360000 20% 450000 Crane determines that the appropriate discount rate for this estimation is 7%. To the nearest dollar, what is the estimated fair value of the trade name?
During the past several years the annual net income of Avery Company has averaged $540,000.At the present time the company is being offered for sale. Its accounting records show the bookvalue of net assets (total assets minus all liabilities) to be $2,800,000. The fair value of Avery’s netidentifiable assets, however, is $3,000,000.An investor negotiating to buy the company offers to pay an amount equal to the fair value forthe net identifiable assets and to assume all liabilities. In addition, the investor is willing to pay forgoodwill an amount equal to the above-average earnings for five years.On the basis of this agreement, what price should the investor offer? A normal return on the fairvalue of net assets in this industry is 15 percent.
On January 1, 2013, Porsche Company acquired the net assets of Saab Company for $450,500 cash. The fair value of Saab’s identifiable net assets was $374,980 on this date. Porsche Company decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting unit (Saab). The information for these subsequent years is as follows: Year Present Valueof Future Cash Flows Carrying Value ofSaab’s IdentifiableNet Assets* Fair ValueSaab’s IdentifiableNet Assets 2014 $400,620 $329,851 $339,983 2015 $399,230 $319,497 $345,596 2016 $350,150 $299,900 $325,360 * Identifiable net assets do not include goodwill. (a) For each year determine the amount of goodwill impairment, if any. 2014 2015 2016 Goodwill impairment $ $ $
Corning Industries owns a patent for which it paid $77,000. At the end of the current year, accumulated amortization on the patent totaled $14,000. Due to adverse economic conditions, Corning’s management determined that it should assess whether an impairment loss should be recognized for the patent. The estimated undiscounted future cash flows to be provided by the patent total $45,000, and the patent's fair value is $30,000. (a) What is the amount of the impairment loss, if any, on the patent at the end of the current year? (b) What is the book value of the patent after any impairment loss is recorded?
Live 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?
On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $200,000 in cash. The equipment had originally cost $180,000 but had a book value of only $110,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman's equipment of book value $200,000 and Brannigan's equipment of book value $150,000. Ackerman reported $300,000 in net income in 2021 (not including any investment income) while Brannigan reported $98,000. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $4,000 per year. A) What is consolidated equipment balance?
Kisses Company had the following property acquisitions of machineries during the current year: (a) During the early part of current year, the entity purchased a machine for P500,000 down and four monthly installments of P1,250,000. The cash price of the machine was P4,700.000. (b) At the beginning of current year, the entity purchased a machine for P2,000,000 in exchange for a non interest bearing note requiring four payments of P500,000. The first payment was made at the end of current year. The rate of interest for this note at date of issuance was 10%. The present value of ordinary annuity of 1 at 10% is 3.17 four four periods. The present value of annuity of 1 in advance at 10% is 3.49 for four periods. (c) At the beginning of current year, the entity acquired a machine by issuing a four-year, non interest bearing note for P2,000,000. The entity has a 10% interest for this type of note. The present value of 1 at 10% for 4 years is 0.68. (d) During the year, the entity exchanged an…
On January 1, 2018, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $120,000 in cash. The equipment had originally cost $108,000 but had a book value of only $66,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $540,000 in net income in 2018 (not including any investment income) while Brannigan reported $177,200. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $6,400 per year. What is consolidated net income for 2018? What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan? What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream? What is the consolidated net income for 2019 if Ackerman reports $560,000 (does not include…
On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $110,000 in cash. The equipment had originally cost $99,000 but had a book value of only $60,500 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $550,000 in net income in 2021 (not including any investment income) while Brannigan reported $180,500. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $6,500 per year. What is consolidated net income for 2021? What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan? What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream? What is the consolidated net income for 2022 if Ackerman reports $570,000 (does not include…
On January 1, 2018, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $200,000 in cash. The equipment had originally cost $180,000 but had a book value of only $110,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method.Ackerman reported $300,000 in net income in 2018 (not including any investment income) while Brannigan reported $98,000. Ackerman attributed any excess acquisition-date fair value to Brannigan’s unpatented technology, which was amortized at a rate of $4,000 per year.a. What is consolidated net income for 2018?b. What is the parent’s share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan?c. What is the parent’s share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream?d. What is the consolidated net income for 2019 if Ackerman reports $320,000 (does not include…
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?
Ireland Airways recently reported the following items at fair value in recent annual report (in millions). Account Amount Source of Input Cash and Cash equivalents $11,837 Identical Asset /Active Market Commercial Paper 135 Similar Asset/Active Market Other Available for Sale Securities 228 Identical Asset/Active Market Option contracts 109 Significant unobservable inputs Time Deposits 550 Identical Asset/Inactive Market Certificates of Deposit 125 Similar Asset/Inactive Market What is the total dollar amount of level 1 assets? What is the total dollar amount of level 2 assets? What is the total dollar amount of level 3 assets?

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