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Using expected cash flow and present value techniques, determine the value of the warranty liability for the 2 0 2 0 sales. Use an annual
Using expected cash flow and present value techniques, determine the value of the warranty liability for the sales. Use an annual discount rate of Assume all cash flows occur at the end of the year.
PLO Expected Cash Flows and Present Value At the end of Sawyer Company is conducting an impairment test and needs to develop a fair value estimate for machinery used in its manufacturing operations. Given the nature of Sawyers production process, the equipment is for special use. No secondhand market values are available. The equipment will be obsolete in years, and Sawyers accountants have developed the following cash flow information for the equipment.
Year
Net Cash Flow
Estimate
Probability
Assessment
$
$
Scrap Value
$
Instructions
Using expected cash flow and present value techniques, determine the fair value of the machinery at the end of Use a discount rate. Assume all cash flows occur at the end of the year.
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