Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Exercise 6 22 Skysong Company owns a trade name that was purchased in an acquisition of Mc...

Exercise 6 22 Skysong Company owns a trade name that was purchased in an acquisition of McClellan Company The trade name has a book value of $3500000 but according to GAAP, it is assessed for

Exercise 6-22 Skysong 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, Skysong 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 Skysong’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 $373,100 20% 634,300 50% 765,400 30% Click here to view factor tables (a) What is the estimated fair value of the trade name? Skysong 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 $

Jun 26 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions