NACVA CVA Practice Questions| TestInsights

Question 1

Automatic reliance on industry rates such as the return on total assets, tangible net worth or equity. This is the procedure which should NOT be used in the estimation of the:

AIndirect capitalization rate

BDirect capitalization rate

CNormalized level of earnings

DTangible asset value

Correct : B

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AIndirect capitalization rate

BDirect capitalization rate

CNormalized level of earnings

DTangible asset value

Question 2

____________ indicates that the collective going-on concern value of the total subject entity is less than the sum of the individual values of the entity's total tangible assets.

AGoodwill

BPositive goodwill

CNegative goodwill

DTrademarks

Correct : C

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AGoodwill

BPositive goodwill

CNegative goodwill

DTrademarks

Question 3

Based on the purpose and objective of the valuation, the analyst will apply the appropriate standard of value to the subject equity interest. The standard of value for the individual assets and liabilities may be different from the standard of value for the subject equity interest. For example:

AThe analyst may apply the fair market value standard to the individual assets and
liabilities even though a different standard of value is determined for the subject equity interest

BThe asset accumulation method will typically indicate the value of 100 percent of the subject company

CThe analyst may apply the fair market value standard to corporate assets even though the same standard of value is determined for the subject equity interest

DThe analyst can apply the ''axiomatic assets minus liabilities'' to indicate the value of the subject business enterprise

Correct : A

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AThe analyst may apply the fair market value standard to the individual assets and
liabilities even though a different standard of value is determined for the subject equity interest

BThe asset accumulation method will typically indicate the value of 100 percent of the subject company

CThe analyst may apply the fair market value standard to corporate assets even though the same standard of value is determined for the subject equity interest

DThe analyst can apply the ''axiomatic assets minus liabilities'' to indicate the value of the subject business enterprise

Question 4

It is the collective revaluation of all of the company's assets and liabilities. This analysis is usually conducted through the application of the capitalized excess earning method. This is a general method in:

AMarket based approach

BAsset based approach

CLiquidity approach

DAsset accumulation method

Correct : B

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AMarket based approach

BAsset based approach

CLiquidity approach

DAsset accumulation method

Question 5

Because of the advanced features (protected by the several patents), Seller management estimates that:

ASeller sells more widgets than it otherwise would

BSeller has a greater market share than it otherwise would

CSeller's average selling price per unit is higher than its competitors' prices

DSeller has short-term supply contract supply contract with the key supplier

Correct : A, B, C

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ASeller sells more widgets than it otherwise would

BSeller has a greater market share than it otherwise would

CSeller's average selling price per unit is higher than its competitors' prices

DSeller has short-term supply contract supply contract with the key supplier

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