NACVA Exam Practice Test Instant Access - No Installation Required

Question 1

Which of the following attribute should be there for an intangible asset to exist from an economic perspective?

AIt should be subject to legal existence and protection

BIt should be subject to specific identification and recognizable description

CIt should be subject to right of private ownership

DAll of these

Answer : D

Question 2

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

AAllocating total value between tangible and intangible assets

BEstimating the net asset value

CEstimating a normalized level of economic earnings

DQuantifying the amount of access earnings

Answer : A

Question 3

(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.

ACapitalized access earning method

BAsset-based approach

CMarket based approach

DDiscounting a terminal value

Answer : A

Question 4

Any Buy-Sell agreement, restrictions, or other similar factor relating to the right to use or sell the property will be ignored for estate gift, and generation skipping tax purposes unless the agreement meets any of the following test EXCLUDING:

AIt is a bona fide business arrangement

BIt must be a device to transfer the property to the natural objects of the transferor's bounty (such as family members) for less than adequate and full consideration in money or money's worth

CIts terms must be comparable to similar arrangements entered into by persons in an arm's length transaction

DIt is a key player in Buy-Sell arrangements

Answer : D

Question 5

If the funding of the forgoing requirements has been provided for through life insurance taken out in prior years that insurance should be reviewed as to both amount and type. The necessary amounts of insurance can change for several reasons. All of the following are those reasons EXCEPT:

AInflation

BIncreased value of the business

CMakeup of business ownership

DPotential earnings

Answer : D

Question 6

Life insurance can serve as an important source of funding for stock purchase agreements pertaining to decreased shareholders. The advantages of using life insurance for the purpose are several. Which of the following is NOT out of such advantage?

ADeceased shareholders' estates

BThe corporation's investment in the cash value of an ordinary life policy is a business asset.

CAny excess insurance the corporation carries over and above the value of the stock purchase agreement can be retained as earned surplus

DProvision for continuity of the business after loss of a key person

Answer : D

Question 7

If the seller is in a low tax bracket and the buyer in a high one, it may be advantageous to:

AStructure the program to increase the interest rate and lower the price

BStructure the program to increase the interest rate and increase the price

CStructure the program to decrease the interest rate and increase the price

DStructure the program to decrease the interest rate and decrease the price

Answer : A

NACVA Certified Valuation Analysts Exam Practice Test