NACVA NACVA Certification CVA Questions & Answers

• Question 31:

  ____________ 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.

  A. Goodwill

  B. Positive goodwill

  C. Negative goodwill

  D. Trademarks

  Correct Answer: C

• Question 32:

  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:

  A. Indirect capitalization rate

  B. Direct capitalization rate

  C. Normalized level of earnings

  D. Tangible asset value

  Correct Answer: B

• Question 33:

  Most analysts agree that one of the most important factors in the estimation of the direct capitalization rate for the excess earnings is the perceived persistence of the excess earnings. The longer the time period and the greater the uncertainty of the expectation of excess earnings, the _________the direct capitalization rate.

  A. Lower

  B. Greater

  C. Fixed

  D. It depends

  Correct Answer: A

• Question 34:

  The second step in capitalized excess earnings method is:

  A. Estimation of normalized level of earnings

  B. Quantifying the amount of excess earnings

  C. Capitalizing the excess economic earnings

  D. Estimating an appropriate direct capitalization

  Correct Answer: A

• Question 35:

  There is no universally accepted conclusion as to what accounts should be "netted out" in the estimation of net tangible asset value. For example, various analysts have interpreted net tangible assets to mean any one of the following EXCEPT:

  A. Gross assets net of accumulated depreciation

  B. Net current value of the financial assets and the tangible assets less current liabilities only

  C. Net current value of the financial assets and the tangible assets minus all liabilities

  D. Probable future earnings

  Correct Answer: D

• Question 36:

  The most common interpretation of net tangible asset value is:

  A. Gross assets net of accumulated depreciation (i.e., current market value of the tangible assets net of economic depreciation)

  B. Net current value of the financial assets and the tangible assets less current liabilities only

  C. Net current value of the financial assets and the tangible assets minus all liabilities

  D. Net current value of the financial less current liabilities only

  Correct Answer: B

• Question 37:

  The most typical procedure/s in capitalized earning method is/are all EXCEPT A. Estimate the net tangible asset value

  B. Estimate a normalized level of economic earnings

  C. Quantify the amount of excess earnings

  D. Estimate an appropriate indirect capitalization rate

  Correct Answer: D

• Question 38:

  Marital dissolution cases in jurisdiction where personal rather than a marital asset and therefore needs to be separately valued from the rest of the business enterprise. This example is an application of:

  A. Controlling ownership interest

  B. Merged and acquired family business

  C. Capitalized access earnings method

  D. Market based valuation approach

  Correct Answer: D

• Question 39:

  The most appropriate application of the excess earnings method is for the purpose of:

  A. Allocating total value between tangible and intangible assets

  B. Estimating the net asset value

  C. Estimating a normalized level of economic earnings

  D. Quantifying the amount of access earnings

  Correct Answer: A

• Question 40:

  (1)

  Partly because of its fairly wide dissemination (2) Partly because of its apparent simplistic nature, _______________ valuation method is widely adopted in one form or another for other valuation purposes, such as material dissolution.

  A.

  Capitalized access earning method

  B.

  Asset-based approach

  C.

  Market based approach

  D.

  Discounting a terminal value

  Correct Answer: A