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What is the estimated fair value of the trade name

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Question - Swifty Corporation owns a trade name that was purchased in an acquisition of Cullumber Company. The trade name has a book value of $1550000, but according to IFRS, it is assessed for impairment on an annual basis. To perform this impairment test, Swifty 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 Swifty'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

Probability Assessment

Cash Flow Estimate

30%

$210,000

50%

365000

20%

420000

Swifty determines that the appropriate discount rate for this estimation is 5%. To the nearest dollar, what is the estimated fair value of the trade name?

Reference no: EM132557843

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