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 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

Name: Crane Company owns a trade name that was purchased in an acquisition o
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Description: 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 e

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

ChapterMB: Model-building Problems

Section: Chapter Questions

Problem 14M

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You were engaged to audit the financial statements of the Philippines Refining Company for the year ended December 31, 2021 with comparative figures for the year ended December 31, 2020. One of your concern regarding material risk is on their long-term liabilities related to the acquisition of machinery. Your examination of their books revealed that on December 31, 2019, Philippines Refining Companypurchased machinery having a cash selling price of P85,933.75. The company paid P10,000 down and agreed to finance the remainder by making four equal payments each December 31 at the implicit interest rate of 12%. The accountant prepared a table of payment below for their long-term financing for you to test for the accuracy of their presentation and payment. Date Total Payment Interest Payment Principal Payment Carrying Value 12/31/19 10,000.00 75,933.75 12/31/20 28,095.49 9,112.05 18,983.44 56,950.31 12/31/21 25,817.48…
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Chadwick Enterprises, Incorporated, operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company's management has decided to test the assets of the restaurants for possible impairment. The relevant information for these assets is presented below at the end of 2024. Assume that Chadwick Enterprises prepares its financial statements according to International Financial Reporting Standards. Book value Estimated undiscounted sum of future cash flows Fair value Assume that the fair value amount given equals both (a) the fair value less costs to sell and (b) the present value of estimated future cash flows. Required: 1. Determine the amount of the impairment loss, if any, reported in the 2024 income statement. 2. Determine the amount of the impairment loss assuming that the estimated undiscounted sum of future cash flows is $8.6 million and fair value is…
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