Assume that Picnic Paper Co. has several minor lawsuits outstanding. To determine the amount of liability to
Question:
Assume that Picnic Paper Co. has several minor lawsuits outstanding. To determine the amount of liability to recognize on the statement of financial position, Picnic decides to use expected cash flow techniques. Based on discussions with their lawyers, Picnic has developed the following cash flow estimates, and related probabilities: Year Cash Flow Estimate Probability Assessment 2023 $2,300 30% $4,500 45% $8,200 25% 2024 $3,200 20% $5,400 50% $7,100 30% Instructions Based on these estimates, and assuming a risk-free rate of 5%, what is the present value of expected cash flows that Picnic should record on its statement of financial position at the end of 2022?
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,