A " L M N + 1 Part D.1-Fair Value Estimate [10 marks total; approx. 15 mins) PV of $1 2 3 Ucluelet Company owns a trade name that was purchased to generate future revenues 4 The trade name has a book value of periods 2% 20% 3% 4% 5% 6% 8% 2,000,000 6 7 8 9 5 According to IFRS, this intangible asset must be assessed for impairment on an annual basis To perform the impairment test, Ucluelet Company estimates the fair value of the trade name using the guidance provided in IFRS 13. The following cash flow estimate has been developed based on internal information 1 2 98039 97561 96117 95181 34250 92456 97087 96154 95238 94340 92593 90703 89000 385734 10 11 12 13 Cash Flow Estimate Probability 500,000 25% 450,000 30% 400,000 45% 3 94232 92860 91514 88900 4 92385 90595 88849 5 90583 88385 82193 86261 85480 86384 83962 79383 82270 79209 73503 74726 78353 68058 PV of an Annuity periods 2% 211% 4% 5% 6% 8% 4 The estimate reflects the annual cash flows anticipated over the period 5 The "risk free" rate is determined to be 6 The "risk-adjusted" rate is determined to be 6% 7 At the end of the period, the trade name is expected to have no residual value. 8 Assume the cash flows occur at the end of each year. REQUIRED: [1] Compute the estimated fair value of the trade name Summarize all relevant inputs to support your computation. [7 marks] 5 years 2 4 5 [2] Explain what is the accounting implication regarding the measurement of the trade name based on your estimate of the fair value compared to the current book value? [1 mark]] [3] Indicate if the estimated fair value of the trade name would be considered a Level 1, 2 or 31 fair value estimate under IFRS 13 and explain your reasoning What is the implication of the level of estimate on the financial statement [2 marks] note disclosures relating to this asset? 3% 98039 97561 97087 96154 95238 94340 92593 1.94156 1.92742 1.91347 188609 185941 183339 178326 2.88388 2.85602 2.82861 2.77509 2.72325 2.67301 2.57710 3.80773 3.76197 3.71710 3.62990 3.54595 3.46511 331213 4.71346 4.64583 4.57971 4.45182 4.32948 4.21236 3.99271