ch 17 w answers fraud acctg

ACC-4800 → Quizzes → Chapter 17

Chapter 17

Instructions:

Questions Limits Points Due Date Availability

62 Questions No Time Limit

Unlimited Attempts

62 pts possible Jun 19 at 11am Always available

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Score for this attempt: 0 out of 62

Submitted Jun 19 at 11am

This attempt took about 3 hours.

Question 1: 1 pts

Continuous valuation analyst.

0% of points

Cost valuation of assets.

0% of points

Certified valuation analyst.

100% of points

None of the above is correct.

0% of points

0 / 1

Question 2: 1 pts

Estate or gift tax reporting.

0% of points

Divorce case distributions.

0% of points

The buyout of one or more shareholders.

0% of points

Death of a shareholder.

0% of points

All of the above are correct.

100% of points

0 / 1

Question 3: 1 pts

Fair market value.

100% of points

Intrinsic value.

0% of points

Historical cost value.

0% of points

Majority stockholder value.

0% of points

None of the above is true.

0% of points

0 / 1

Question 4: 1 pts

Increase the value somewhat to get the minority owner out of the business.

0% of points

Do a standard professional valuation in which the minority interest issue is ignored.

0% of points

Discount the value somewhat to reflect the diminished value of being a minority interest holder.

100% of points

A valuation professional who holds a CVA has the credentials of a:

Common reasons for needing valuations of closely held businesses are:

The most common measure of value is:

If a shareholder in a closely held business sells his or her stock, the valuation professional typically would:

Chapter 17: ACC-4800-001 https://uvu.instructure.com/courses/67279/quizzes/133627

1 of 15 6/19/2012 12:10 PM

Always use a historical cost basis analysis to take conservatism into account.

0% of points


0% of points

0 / 1

Question 5: 1 pts

Dealing with all of the strife and bickering that goes on in divorce cases.

0% of points

Dealing with the child custody issues.

0% of points

Figuring out what assets to sell and what assets to keep.

0% of points

Searching for hidden assets that a spouse may try to hide from the court.

100% of points


0% of points

0 / 1

Question 6: 1 pts

Bankruptcy agreement.

0% of points

Medical malpractice agreement.

0% of points

Buy-sell agreement.

100% of points

Discounted cash flow agreement.

0% of points


0% of points

0 / 1

Question 7: 1 pts

Balance sheet analysis.

0% of points

Historical cost basis.

0% of points

Book value method.

0% of points

Income statement approach.

100% of points

0 / 1

Question 8: 1 pts

$550,000.

0% of points

$770,000.

0% of points

$1,100,000.

100% of points

$1,600,000.

0% of points


0% of points

0 / 1

Question 9: 1 pts

A major challenge in doing valuations in a divorce case is:

One type of agreement that can have a direct impact on the valuation of parts of a closely held business is a:

The most commonly accepted methods of business valuation use some form of:

The Indy Company experiences the following annual incomes over the last five years: $60,000, $70,000, $110,000, $150,000, $160,000. A firm like Indy Company

commands a 10% discount rate and a price earnings ratio of 10. Using a non-weighted earnings model, what is the value of the firm?

The Indy Company experiences the following annual incomes over the last five years: $60,000, $70,000, $110,000, $150,000, $160,000. A firm like Indy Company

commands a 10% discount rate and a price earnings ratio of 10. Using a weighted earnings model that weights the more recent earnings more heavily, what is the value

of the firm?


2 of 15 6/19/2012 12:10 PM

$550,000.

0% of points

$770,000.

0% of points

$1,100,000.

0% of points

$1,286,667.

100% of points


0% of points

0 / 1

Question 10: 1 pts

It is hard to determine the correct discount factor.

0% of points

There is not a consensus on the definition of free cash flows.

100% of points

Cash flows are not as good a predictor of value as reported net income.

0% of points

The Fed keeps changing the discount rate.

0% of points


0% of points

0 / 1

Question 11: 1 pts

Fair value measurements used in financial statement reporting.

100% of points

Using multiple concepts of the measurement of value.

0% of points

Addressing unexplained differences in using various valuation methods.

0% of points

Superseding all other authoritative pronouncements relating to valuations.

0% of points

None of the above.

0% of points

0 / 1

Question 12: 1 pts

FASB Conceptual Framework No. 2.

0% of points


0% of points


0% of points

All of the above.

100% of points

None of the above.

0% of points

0 / 1

Question 13: 1 pts

Expanding the number of acceptable methods of valuation.

0% of points

Creating a single formula for performing any kind of valuation.

0% of points

Providing a single definition of fair value, together with a framework for measuring fair value.

100% of points

Eliminating any possibility for interpretations of value measurements.

0% of points

A favorite method of business valuation is the use of free cash flows. With this approach, free cash flows are discounted to their present value. A major challenge with this

method is:

The Statement of Financial Accounting Standards No. 157 deals primarily with:

The conclusions presented in FASB No. 157 support which FASB Conceptual Framework?

According to FASB No. 157, the changes made to the Statement will improve financial reporting by:


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None of the above.

0% of points

0 / 1

Question 14: 1 pts

The National Association of Business Valuation Analysts (NACVA).

0% of points

The American Society of Appraisers (ASA).

0% of points

The Institute of Business Appraisers, Inc. (IBA).

0% of points

All of the above.

100% of points

None of the above.

0% of points

0 / 1

Question 15: 1 pts

Fewer lawsuits than before.

0% of points

Greater professionalism within the valuation community.

100% of points

Higher fees for business valuation professionals.

0% of points

Greater understanding among the public of the results of business valuation reports.

0% of points

None of the above.

0% of points

0 / 1

Question 16: 1 pts

Independence.

0% of points

Possession of a master's degree in business by the business valuation analyst.

100% of points

Fee not contingent on appraised value.

0% of points

List the information sources used.

0% of points

None of the above.

0% of points

0 / 1

Question 17: 1 pts

7.

100% of points

4.

0% of points

3.

0% of points

8.

0% of points

5.

0% of points

0 / 1

Question 18: 1 pts

Limiting conditions.

0% of points

Definitions of valuation terms.

The major business valuation organization that has developed rigorous business valuation standards is:

The creation of business valuation standards has led to:

All of the items listed below are elements of business valuation standards except:

The main sections of a business valuation report usually number:

In a typical business valuation report, one exhibit that is seldom used is:


4 of 15 6/19/2012 12:10 PM

0% of points

Ratio analysis of the company.

0% of points

Common size balance sheets of the company.

0% of points

None of the above.

100% of points

0 / 1

Question 19: 1 pts

Not really a valuation method.

100% of points

The best measure of value because it reflects actual accounting measurements.

0% of points

A good valuation method but it usually provides a conservative measure of value.

0% of points

The same thing as market value.

0% of points

None of the above.

0% of points

0 / 1

Question 20: 1 pts

The Uniform Commercial Code nationally.

0% of points

Individual state laws.

100% of points

Supreme Court rulings.

0% of points

Professional standards.

0% of points

None of the above.

0% of points

0 / 1

Question 21: 1 pts

Most divorce cases.

0% of points

All business valuation cases.

0% of points

Agreements made by owners of closely held businesses.

100% of points

Bankruptcy cases.

0% of points

None of the above.

0% of points

0 / 1

Question 22: 1 pts

The general market value of a business.

0% of points

The market value of a listed company.

0% of points

The value of the business to the current owner.

0% of points

The value of the business to a specific buyer.

100% of points

None of the above.

0% of points

0 / 1

Generally speaking "book value" is considered to be:

"Equitable distribution" in divorce cases is driven by:

"Buy-sell agreements" relate to:

"Investment value" is:


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Question 23: 1 pts

Technically is less than a 50-percent ownership in the business.

0% of points

Might be worth less than a pro-rata share of the business value.

0% of points

May have limited influence in the operations of the business.

0% of points

All of the above.

100% of points

None of the above.

0% of points

0 / 1

Question 24: 1 pts

NY Stock Exchange rules and guidelines.

0% of points

Applicable state laws.

100% of points

Federal code.

0% of points

International rules of stock law.

0% of points

None of the above.

0% of points

0 / 1

Question 25: 1 pts

Was promulgated in 1959.

100% of points

Deals with companies that are listed on major stock exchanges.

0% of points

Requires that all people over 59-60 must start drawing retirement funds.

0% of points

Seldom applies to business valuation issues.

0% of points

None of the above.

0% of points

0 / 1

Question 26: 1 pts

Deals with the valuation of closely held businesses.

0% of points

Provides a list of eight factors that should be considered in valuing a closely held business.

0% of points

Is particularly useful for valuing closely held businesses in estate and gift tax situations.

0% of points

All of the above.

100% of points

None of the above.

0% of points

0 / 1

Question 27: 1 pts

20 years.

0% of points

5 years.

100% of points

10 years.

0% of points

8 years.

A "minority interest" in a business:

Dissenting minority stockholders may have to take their dispute to the court. If so, such cases are covered by:

IRS Rev. Rul. 59-60:

IRS Rev. Rul. 59-60:

In trying to determine how many years of data are necessary to perform a business valuation, a commonly used starting point is:


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0% of points

None of the above.

0% of points

0 / 1

Question 28: 1 pts

"Customizing" financial statements.

0% of points

"Downsizing" financial statements.

0% of points

"Spreading" financial statements.

100% of points

"Simplifying" financial statements.

0% of points

None of the above.

0% of points

0 / 1

Question 29: 1 pts

The American Institute of Certified Public Accountants (AICPA).

0% of points

The Association of Certified Fraud Examiners (ACFE).

0% of points

The Institute of Management Accounting (IMA).

0% of points

The Risk Management Association (RMA).

100% of points

None of the above.

0% of points

0 / 1

Question 30: 1 pts

Adjusting a company's assets and liabilities up or down to reflect their "fair value."

100% of points

Adjusting all accounts to their incurred "historical cost."

0% of points

Using only income statement accounts.

0% of points

A method that is no longer used in business valuations.

0% of points

None of the above.

0% of points

0 / 1

Question 31: 1 pts

One of the market approach methods of business valuation.

0% of points

Requires additional investment by the seller.

0% of points

Is actually a hybrid of the cost and income approaches to business valuation.

100% of points

Is also called the discounted future cash flow method.

0% of points

None of the above.

0% of points

0 / 1

Question 32: 1 pts

The American Institute of Certified Public Accountants (AICPA).

Preparing common-sized financial statements and performing ratio analyses of financial statements are examples of:

Probably the most comprehensive source of information on financial statements and credit analysis by industry is:

The "cost approach" to business valuation involves:

The "capitalization of excess earnings method" is:

"Fair market value" is the amount at which property would change hands between a willing seller and a willing buyer when neither is acting under compulsion and when

both have knowledge of the relevant facts. This is the definition provided by:


7 of 15 6/19/2012 12:10 PM

0% of points

The Association of Certified Fraud Examiners (ACFE).

0% of points

The Institute of Management Accounting (IMA).

0% of points

The Risk Management Association (RMA).

0% of points

None of the above.

100% of points

0 / 1

Question 33: 1 pts

Seldom happens.

0% of points

Often includes a valuation premium for control.

100% of points

May be investigated by the Securities and Exchange Commission (SEC).

0% of points

Has the same valuation impact as having a minority interest in the business.

0% of points

None of the above.

0% of points

0 / 1

Question 34: 1 pts

Are the regulations for research and experimentation tax credits.

0% of points

Is the 2006 Tax Simplification Act.

0% of points

Is the IRS publication on the Sale of Closely Held Businesses.

0% of points

Is IRS Rev. Rul. 59-60.

100% of points

None of the above.

0% of points

0 / 1

Question 35: 1 pts

Business valuations make no sense.

0% of points

The court might direct the valuation expert to ignore the company's excessive debt and value the company as if it had a normal debt level.

100% of points

The court prohibits many types of business valuation methods.

0% of points

The valuation expert must be very conservative in his/her valuation amounts.

0% of points

None of the above.

0% of points

0 / 1

Question 36: 1 pts

A 100-percent controlling interest in a business:

One/some of the most important IRS guidelines for gift and estate tax purposes:

In litigating bankruptcies:

Westwood Manufacturing Company has experienced the following earnings record over the last five years.

Year 1 Year 2 Year 3 Year 4 Year 5

Revenue $6,500,000 $6,800,000 $7,300,000 $ 7,500,000 $9,500,000

Cost of goods sold 3,700,000 3,900,000 4,300,000 4,400,000 6,000,000

Gross profit 2,800,000 2,900,000 3,000,000 3,100,000 3,500,000

Operating expenses 2,350,000 2,400,000 2,450,000 2,500,000 2,600,000

Net income $ 450,000 $ 500,000 $ 550,000 $ 600,000 $ 900,000


8 of 15 6/19/2012 12:10 PM

$600,000

100% of points

$550,000

0% of points

$650,000

0% of points

$500,000

0% of points

None of the above

0% of points

0 / 1

Question 37: 1 pts

$600,000

0% of points

$900,000

0% of points

$666,667

100% of points

$533,333

0% of points

None of the above

0% of points

0 / 1

Question 38: 1 pts

$3,500,000

0% of points

$5,013,333

0% of points

$6,266,667

0% of points

$5,640,000

100% of points

None of the above

0% of points

0 / 1

Question 39: 1 pts

$3,500,000

0% of points

$5,013,333

0% of points

$6,266,667

100% of points

$5,640,000

0% of points

None of the above

0% of points

0 / 1

Question 40: 1 pts

Westwood is a closely held company with five family members owning stock. The stock is not traded on any stock exchange and none of the shares have

ever been sold after the initial sale of the stock from the company to the shareholders. One shareholder wants to sell her stock back to the company and

cease any activities with the company. She owns 20 percent of the outstanding shares of the company stock. Similar companies’ stock has traded with

price/earnings (PE) ratios of 8, 9, 10, 11, and 9 over the past five years.

The average earnings for the five year period are:

Using the facts in question 86, using the weighted values to assign more weight to the more recent years would yield a value for the five year period of:

Using the facts in question 86, using the average earnings model and using the average price/earnings ratio for similar companies for the five year

period, the value of Westwood Manufacturing at the end of year five is:

Using the facts in question 86, giving more weight to the most recent year’s earnings and using the average price/earnings ratio of similar companies for the

five year period, the value of Westwood Manufacturing at the end of year five is:

Using the facts in question 86, using the average earnings model and using the price/earnings ratio for similar companies for the last two years, the

value of Westwood Manufacturing at the end of year five is:


9 of 15 6/19/2012 12:10 PM

$6,000,000

100% of points

$5,013,333

0% of points

$6,266,667

0% of points

$5,640,000

0% of points

None of the above

0% of points

0 / 1

Question 41: 1 pts

$1,253,333

0% of points

$1,200,000

100% of points

$6,266,667

0% of points

$5,640,000

0% of points

None of the above

0% of points

0 / 1

Question 42: 1 pts

Might be higher than $1,400,000 because the shareholder is one of only a few shareholders in the company.

0% of points

Might be lower than $1,400,000 because the shareholder owns a minority share of stock in a closely held company without a regular market in which to make a sale.

100% of points

Might be subject to special SEC regulations before the stock can be valued and sold.

0% of points

Is completely unrelated to the fact that the stock is a minority interest in a closely held company.

0% of points

0 / 1

Question 43: 1 pts

$96,980,550

100% of points

$104,839,950

0% of points

Using the facts in question 86, using the average earnings model and using the average price/earnings ratio for similar companies for the five year

period, the value of the stock that the shareholder wants to sell to the company is:

Using the facts in question 86, assume for this question that the computed value of the 20 percent share of the company is $1,400,000. Because the

share being sold is 20 percent of a closely held company, the value of the stock:

An investment group is considering the acquisition of a well known and respected construction business. In evaluating the business, the investment group

estimates annual free cash flows of $10,000,000 per year for the next 10 years. Free cash flows for years 11-30 are estimated to be $15,000,000 per year.

Below are some selected values for the present value of an ordinary annuity:

Period 9% 10% 11% 12%

1 .91743 .90909 .90009 .89286

2 1.75911 1.73554 1.71252 1.69005

3 2.53130 2.48685 2.44371 2.40183

4 3.23972 3.16986 3.10245 3.03735

5 3.88965 3.79079 3.69590 3.60478

10 6.41766 6.14457 5.88923 5.65022

15 8.06069 7.60608 7.19087 6.81086

20 9.12855 8.51356 7.96333 7.46944

Assume the investment group believes that the appropriate discount rate in valuing this investment opportunity should be based on an average price/earnings ratio that

ranges between 9 and 11. The estimated value of this investment is:


10 of 15 6/19/2012 12:10 PM

$90,003,800

0% of points

$83,790,500

0% of points

None of the above

0% of points

0 / 1

Question 44: 1 pts

$96,980,550

0% of points

$104,839,950

0% of points

$90,003,800

0% of points

$150,000,000

100% of points

None of the above

0% of points

0 / 1

Question 45: 1 pts

Increase.

0% of points

Decrease.

100% of points

Could go up or down.

0% of points

Cannot be determined from the data given.

0% of points

None of the above.

0% of points

0 / 1

Question 46: 1 pts

Acquire the investment because the present value of the investment is $1,980,550 more than the cost of the investment.

0% of points

Cannot be determined from the information given.

0% of points

Pass on the investment because the present value of the investment is $6,404,160 less than the cost of the investment.

100% of points

Acquire the investment because the cost is $95,000,000 and the estimated total value of the cash inflows over the next 20 years is $280,000,000.

0% of points

0 / 1

Question 47: 1 pts

Exhibits, summary, and introduction.

0% of points

Company information, valuation methodology, and financial condition of the company.

0% of points

Front pages, introduction, and company information.

100% of points

Valuation methodology, valuation conclusions, and exhibits.

0% of points

0 / 1

Using the facts in question 93, assume the investment group believes that the appropriate discount rate in valuing this investment opportunity should be

12 percent. The estimated value of this investment is:

Using the facts in question 93, if the price/earnings ratio used by the investment group to value the investment opportunity changed from a P/E ratio of 9

to a P/E ratio of 11, the estimated value of the investment would:

Using the facts in question 93, assume the investment group believes that the appropriate discount rate in valuing this investment opportunity should be

11 percent. Additionally, new estimated cash flows increase from $15,000,000 per year to $20,000,000 per year for years 11-20, and estimated cash flows

for years 1-10 decrease to $8,000,000 per year. If the investment can be acquired for $95,000,000 the investment group should:

The first several sections in a valuation report usually contains:


11 of 15 6/19/2012 12:10 PM

Question 48: 1 pts

Independence.

0% of points

A disclosure of limiting conditions.

0% of points

A listing of professionals participating in the valuation.

0% of points

A statement that the fee may be contingent upon the results of the valuation.

100% of points

0 / 1

Question 49: 1 pts

Is logical and appropriate because the values in the balance sheet are based on incurred historical costs.

0% of points

Is not really a valuation method.

100% of points

Always acceptable if the valuation expert uses adjusted book value.

0% of points

Always omits intangible assets.

0% of points

0 / 1

Question 50: 1 pts

The income approach.

0% of points

The cost approach.

0% of points

The market approach.

0% of points

The appraisal approach.

100% of points

0 / 1

Question 51: 1 pts

Review every aspect of the expert report of the opposing expert witness.

0% of points

Read the most recent opinions of the judge that is presiding over the case.

100% of points

Be certain that you understand and can discuss the facts in the case.

0% of points

Carefully check your resume to be certain it is correct and up to date.

0% of points

0 / 1

Question 52: 1 pts

Will go over the questions he/she plans to ask you on direct examination during the deposition.

0% of points

Will explain trial rules and procedures, particularly if it is a federal court trial.

0% of points

Will offer you advice on how to avoid answering questions.

0% of points

Will explain the deposition process and requirements and tell you whatever information he/she has about the questioning style and strategy used by the deposing attorney.

100% of points

0 / 1

Question 53: 1 pts

Uses all of the correct accounting terminology so that the court does not misunderstand the key issues in the case.

0% of points

Includes a discussion of FASB No. 157 in the testimony with reference to applicable earlier FASBs.

Common features of standards for valuation professionals includes all of the items listed below except:

It is sometimes stated the use of book value in valuations:

The three main valuation methods include all of the following except:

You are an expert witness preparing for testimony in a valuation case. As such, you should do all of the following except:

You are an expert witness in a case preparing to testify at deposition. To help you prepare, your attorney:

Because business valuations can be very complex, it is essential that when testifying the forensic accounting expert witness:


12 of 15 6/19/2012 12:10 PM

0% of points

Provides testimony that is clearly understandable to the court regardless of the complexity of the case.

100% of points

Uses fair market value as the foundation for the opinions in the case.

0% of points

0 / 1

Question 54: 1 pts

To establish a framework for measuring fair value.

0% of points

To define fair value.

0% of points

To simplify and codify related guidance within GAAPs.

0% of points

To eliminate the “cost basis” as a method of valuation.

100% of points

0 / 1

Question 55: 1 pts

Add stuff to make the vita look better.

0% of points

Be certain that the vita is current and that it does not include any statements that exaggerate experiences and accomplishments.

100% of points

Make the vita look very professional by rounding up to the nearest whole year all statements about work and educational experiences.

0% of points

List charitable works no matter how minor so the expert looks caring and thoughtful.

0% of points

0 / 1

Question 56: 1 pts

$531,600.

100% of points

$285,600.

0% of points

$246,000.

0% of points

$592,400.

0% of points

None of the answers above is correct.

0% of points

Year EarningsJudy's

Salary

Total

Business

Income

1 $25,000 $35,000 $60,000

2 $38,000 $35,000 $73,000

3 $45,000 $40,000 $85,000

4 $60,000 $45,000 $105,000

5 $70,000 $50,000 $120,000

Totals$238,000$205,000$443,000

The stated objective for issuing FASB No. 157 included all of the following except:

A forensic accountant has been asked to send a resume to an attorney that is contemplating hiring the person as an expert witness in a case. The forensic

accountant should review his/her vita and be sure to:

Five years ago, Judy started the “Piece of Cake” bakery shop in New York City. The bakery specializes in specialty cupcakes baked and decorated in a

variety of popular and unique flavors. The bakery’s business has grown steadily during the five-year period. Income for the bakery has been $25,000,

$38,000, $45,000, $60,000, and $70,000 respectively. In addition, Judy has paid herself a salary of $35,000, $35,000, $40,000, $45,000, and $50,000

respectively during the five-year period. Although Judy loves the business, she has decided to sell the “Piece of Cake” bakery and move to San Francisco

where she plans to start a new and different business. Two of Judy’s trusted employees are thinking about buying the shop from Judy, and there are several

other potential buyers considering this investment. The big question is what is the value of the business? The business has a twenty-year lease, and the

ovens, display cases, and other business assets have a net book value of $95,000 and an appraised value of $105,000. Most businesses of this type sell

for about six times earnings.

Using the average income approach, the value of the business is:


13 of 15 6/19/2012 12:10 PM

Average business earnings = $443,000 / 5 years = $88,600

Business valuation using weighted earnings =$88,600 × 6 = $531,600

0 / 1

Question 57: 1 pts

$531,600.

0% of points

$330,400.

0% of points

$262,000.

0% of points

$592,400.

100% of points

None of the answers above is correct.

0% of points

Year EarningsJudy's

Salary

Total

Business

Income

WeightingTotal

Income

1 $25,000 $35,000 $60,000 1 $60,000

2 $38,000 $35,000 $73,000 2 $146,000

3 $45,000 $40,000 $85,000 3 $255,000

4 $60,000 $45,000 $105,0004 $420,000

5 $70,000 $50,000 $120,0005 $600,000

Totals$238,000$205,000$443,00015 $1,481,000

Average weighted business earnings = $1,481,000 / 15 = $98,733

Business valuation using weighted earnings = $98,733 × 6 = $592,400

0 / 1

Question 58: 1 pts

Yes, it is right next door and Judy’s asking price is less than its value.

0% of points

No, a bakery and a restaurant are not compatible businesses.

0% of points

It depends; Judy’s price is higher than the “average income” valuation, but it is lower than the “weighted average income” valuation.

100% of points

In order to make an intelligent decision, the potential buyer should have another appraiser value the assets of the business.

0% of points

0 / 1

Question 59: 1 pts

It is a good deal because the “true value” of the business would be its average income valuation plus $105,000 of assets or $585,000.

0% of points

The average income method values the expected future earnings of the business and therefore the assets are already considered in the valuation.

100% of points

Judy’s offering is good because the assets should be included in the valuation, but we should use the net book value because it included depreciation on the assets.

0% of points

Although it is true that the assets are worth about $100,000, it is clear the assets’ income producing value is much greater than the appraised value. Therefore, it is

clearly a good investment.

0% of points

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Question 60: 1 pts

The guideline method.

0% of points

The past transaction method.

Using the same facts as in 106 above, using the weighted average income approach, the value of the business is:

Using the same facts as in 106 above, Judy offers to sell the business for $550,000 to a person that operates a restaurant next door to the bakery. If

the restaurant owner is interested in buying this type of business, is Judy’s offer a good deal?

Assume for this question that the average income valuation of the business is $480,000. Judy has offered to sell the business to one of her employees for

$525,000. She explains to her employees that the price is a “good deal” for them because they should add the $105,000 appraised value of the business

assets to get to the “real value” of the business. What is your advice to the employees about Judy’s offer to sell at $525,000?

Under the “market approach” to valuation, there are three methods that can be used. Included are all of the following except:


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0% of points

The weighted average method.

100% of points

The market data method.

0% of points

0 / 1

Question 61: 1 pts

Divorce cases.

0% of points

Bankruptcy cases.

0% of points

Hospital medical plans.

0% of points

Closely held companies.

100% of points

0 / 1

Question 62: 1 pts

What accounting documents should be used in analyzing data and preparing the expert report.

0% of points

The characteristics, apparent strategies, and questioning style of the opposing attorney who will depose and cross examine the expert.

100% of points

The key accounting/fi nancial concepts that the expert should use in the analysis and testimony to be used in the expert report.

0% of points

How to avoid answering tough questions during deposition testimony.

0% of points

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Quiz Score: 0 out of 62

“Buy-sell agreements” are most commonly associated with:

When preparing to testify in a case, an expert witness would seek advice from his/her attorney about:


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ch 17 w answers fraud acctg

Documents

certified fraud examiners

free cash flows

average earnings model

closely held businesses

certified public accountants

weighted earnings model

closely held company

indy company commands