NACVA NACVA Certifications CVA Questions & Answers

• Question 141:

  Depletion is relatively easy to define; it is very difficult to measure. Because of:

  A. Percentage depletion

  B. Unrelated depletion methods

  C. Reasonable estimates can be subject to wide variations

  D. None of these

  Correct Answer: C

• Question 142:

  Impairment is the difference in value between the carrying amount of goodwill and the actual fair value of the goodwill. However, for federal income tax reporting purposes:

  A. The cost of developing, maintenance, or restoring intangibles which are unidentifiable, have indeterminate lives, or are inherent in a continuing enterprise should be expensed as incurred.

  B. Such intangibles assets which are purchased must be carried at cost and amortized over their useful lives and cannot be written down or written off at date of acquisition.

  C. Identifiable intangible assets with an indefinite life should not be amortized

  D. The cost of developing, maintenance, or restoring intangibles which are unidentifiable, have indeterminate lives, or are inherent in a continuing enterprise should be expensed as incurred. By contrast, such intangibles assets which are purchased must be carried at cost and amortized over their useful lives and cannot be written down or written off at date of acquisition.

  Correct Answer: D

• Question 143:

  _____________ is the method that produces the largest, quickest depreciation deductions is the one most often selected by closely held businesses, since they are most eager to minimize reported taxable income.

  A. MACRS

  B. Declining balance method

  C. Straight –line method

  D. Sum-of-years

  Correct Answer: A

• Question 144:

  The analyst should keep in mind that (1) if earnings are adjusted from LIFO to FIFO and (2) if after-tax income or after-tax cash flow are used as the appropriate measure of economic income, then the adjustment should be net of:

  A. Net difference between the Earnings and income tax liability adjustments

  B. Net difference between the inventory and income tax liability adjustments

  C. Income tax effect (either additional taxes or benefit) associated with it

  D. GDP rate (either additional taxes or benefit) associated with it

  Correct Answer: C

• Question 145:

  One way is to compare the historical percentage of bad debt losses from past credit sales with the percentage current credit sales being charged to bad debt expense to see if too little or too much is currently being charged. Another approach is:

  A. To compare the unearned revenue schedule allowance relative to the amount of overdue accounts

  B. To compare the aged account receivable schedule allowance relative to the amount of overdue accounts

  C. To compare the aged account receivable schedule allowance relative to the amount of expired accounts

  D. To compare the aged account receivable schedule allowance relative to the amount of undue accounts

  Correct Answer: B

• Question 146:

  Most companies carry accounts receivable and deduct some allowance for potentially uncollectible accounts. The typical policy is to ________ the allowance for doubtful accounts at the end of each month by a percentage of that month's _______.

  A. Increase, Credit sales

  B. Increase, Credit purchases

  C. Decrease, Credit sales

  D. Decrease, Unearned Revenue

  Correct Answer: A

• Question 147:

  A control owner or potential owner might make control adjustments, but a minority owner, generally, could not force the same changes. Therefore, control adjustments normally would be made only in the case a controlling interest valuation, unless there was reason to believe that the changes were imminent and probable. These include all of the following EXCEPT:

  A. Excess or deficient compensation and perquisites

  B. Gains, losses or cash realization from sale of excess assets

  C. Discounted operations

  D. Elimination of operations involving company insiders (e.g. employment, non-market rate leases)

  Correct Answer: C

• Question 148:

  Which one of the following is/are example/s of normalizing adjustments?

  A. Adequacy of allowance and reserve accounts

  B. Non-depreciation methods and schedules

  C. Policies regarding capitalization or expensing of various costs (adjust to industry norms)

  D. Changes in capital structure

  Correct Answer: AC

• Question 149:

  When there is a choice among accounting practices, private companies tend towards a more conservative selection in order to minimize taxes, while public companies may account more aggressively in order to report:

  A. More benefits

  B. More income so as to please shareholders

  C. Asset values

  D. Treatment of intangible assets

  Correct Answer: B

• Question 150:

  The advantages of searching online valuation information include all of the following EXCEPT:

  A. Faster and more efficient information retrieval than is usually possible in printed sources

  B. The ability to combine different facets of a subject in a single search statement

  C. To get maximum benefit from industry and economic research

  D. The ease of searching several databases in sequence to produce a comprehensive survey of the available literature

  Correct Answer: C