Exercise 6-22 Killroy 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, Killroy 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 Killroy's estimate of annual cash flows over the next 10 years. The trade name is assumed to have no salvage value after the 10 years. (Assume the caslh flows occur at the end of each year.) Probability Assessment Estimate 1,800 645,100 $371, 0 0 0 762,700 TABLE 6-4 PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 .66957 .73554 2.44371 3.03736 3.35216 91743 1.75911 89286 1.78326 1.71252 2.57710 3.99271 4.62288 5.74664 6.71008 2.48685 2.85498 3.79079 3.60478 5 3.69590 4.23054 5.14612 4.48592 4.56376 4.48732 5.53705 6.14457 7.16073 7.48690 7.78815 6.20852 6.49236 6.74987 5.23371 5.58315 5.84737 6.19437 7.90378 8.24424 8.55948 6.62817 7.19087 8.31256 7.82371 8.02155 8.20141 8.36492 8.51356 7.37916 7.54879 8.85137 6.04716 724 9.37189 9.60360 9.81815 4967 7.36578 8.95012 12855 9.29224 9.58021 9.70861 7.83929 9.822588.9847482643 764465 6.31246 6.49056 6.53351 6.56598 8.07507 8.17574 10.01680 10.20074 10.37106 10.52876 10.67478 8.64869 23 6.43377 6.46415 8.34814 7.84314 26 9.92897 10.02658 10.11613 9.23722 9.30657 9.36961 9.42691 8.60162 8.65011 8.69379 29 8.05518 10.56682 9.60868 8.60064 8.1 1 159 6.57911 6.60910 6.62314 6.63375 6.64178 11.34980 11.43500 11.51389 11.58693 10.34280 10.40624 9.52638 32 9.56943 9.64416 9.67651 11.71719 8.87859 8.20751 11.82887 11.87858 8.91859 10.72552 10.75736 8.24378 9.77905 8.83567 822099 662882 What is the estimated fair value of the trade name? Killroy determines that the appropriate discount rate for this estimation is 10%. (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 Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT
