(Solved): VALUATION CONCEPTS AND METHODOLOGIES MULTIPLE CHOICE THEORY. Write the letter of the best answer be ...

VALUATION CONCEPTS AND METHODOLOGIES MULTIPLE CHOICE THEORY. Write the letter of the best answer before the number of the question or statement being answered. 1. This has been defined by the industry as transactions that would yield future economic benefits as a result of past transactions. a. Asset b. Equity c. Net Assets d. Shares of Stocks 2. These are investments which are already in the going concern state, as most business are in the optimistic perspective that they will grow in the future because of historical proof a. Green Field Investments b. Brown Field Investments c. Blue Field Investment d. Black Field Investments 3. The following describes the benefits of having a sound Enterprise-wide Risk Management system except a. Facilitates elimination of all business risks b. Manage performance variability c. Enhance business resilience against changes d. Improve distribution of resource across the firm 4. One of the advantages of using asset-based methods in valuation is a. Relies on the ability of the firm to generate revenues in the coming years b. Considers future cash flows that can be derived from the use of assets c. Incorporates how the market perceives the value of the company d. Enables stakeholders to validate firm value based on the value of assets it currently own 5. This refers to the value recorded in the accounting books of a firm as reflected in the audited financial statements. a. Exit value b. Book value c. Earnings per share d. Fair market value VALUATION CONCEPTS AND METHODOLOGIES 6. Receivables that are collectible after 60 days are classified as a. Current Liabilities b. Non-current Liabilities c. Current Assets d. Non-current Assets 7. The net book value of assets may also represents a. Total shareholder's equity b. Total assets c. Total liabilities d. Total long-term debt 8. Book value also reflects the company's a. Historical value b. Liquidation value c. Intrinsic value d. Fair market value 9. Using the book value has its advantages, the following statements provide them except a. Information necessary for computation can be quickly gathered b. Validated by a third-party expert with knowledge on how much assets are sold in the open market c. Shows a transparent view on firm value d. Can easily be validated by reviewing the company's audited financial statements 10. Cost of similar assets that have the nearest equivalent value as of the valuation date. a. Book value b. Replacement cost c. Fair market value d. Reproduction value 11. The factor that affects the replacement value of an asset are the following except a. Competitive advantage of the asset b. Size of the asset c. Original acquisition cost of the asset d. Asset age VALUATION CONCEPTS AND METHODOLOGIES 12. The main basis to determine the value of the insurance premium to be paid to cover the risk for an asset is a. Original acquisition cost b. Replacement cost c. Book value as of premium payment date d. Acquisition cost less accumulated depreciation and impairment losses 13. When determining replacement costs of assets, valuators tend to consult with a. Actuaries b. Board of Directors c. Appraisers d. Equity Analysts 14. Book value and replacement values of an asset are theoretically different. The difference of these two is a. Book value is based on the historical acquisition costs while replacement value is based on the net asset value as of balance sheet date. b. Book value can be computed from the financial statements while replacement value is gathered by employing services of an appraiser. c. Book value is computed on a per share basis, but replacement cost is shown as absolute values. d. Book value includes cost allowances for gaps against market prices while replacement cost does not. 15. What method is appropriate in valuing assets which do not have available external information even after consulting with appraisers? a. Book value method b. Replacement value method c. Reproduction value method d. Liquidation value method 16. The use of reproduction value method is appropriate for the following except a. When calculating value of new technology or start-up businesses b. Ventures with highly specialized equipment c. Companies that are highly reliant with intangible assets d. Businesses that use equipment supplied by third-party manufacturer 17. Reproduction value is the a. Estimate of cost of reproducing, creating, developing or manufacturing a similar asset internally b. Salvage value of the asset c. Net value reflected in the company's financial statements d. Cost of similar assets that have the nearest equivalent vales as of the valuation date 18. What is the limitation imposed by the use of reproduction value methong a. It considers only the original cost of the assets at the time they are acquired b. High professional fees of appraisers c. Difficulty in validating reasonableness of calculated value because of limited comparators d. Inability to forecast future cash flows accurately because of uncertainties in the market 19. The following methods shows the most recent value of the firm assets the market as of the valuation date, except a. Replacement value method b. Liquidation value method c. Reproduction value method d. Book value method 20. When computing for book value, which of the following items should be deducted the asset value? a. Total liabilities b. Total shareholders equity c. Long-term debt only d. Ordinary share capital