ABV Goodwill & Intangible Asset Valuation

Question 1

Under ASC 805, which of the following best describes 'goodwill' in a business combination?

Accepted Answer

The excess of the acquisition price over the fair value of identifiable net assets acquired

Answer

The excess of the fair value of identifiable net assets over the acquisition price

Answer

The book value of all intangible assets recognized by the acquiree

Answer

The present value of expected future synergies discounted at WACC

Question 2

The Multi-Period Excess Earnings Method (MPEEM) is most commonly used to value which type of intangible asset?

Accepted Answer

Customer relationships and developed technology

Answer

Trade names and trademarks

Answer

Non-compete agreements

Answer

In-process research and development

Question 3

Which relief-from-royalty method assumption is most critical when valuing a trade name?

Accepted Answer

The appropriate royalty rate that a willing licensor and licensee would negotiate

Answer

The useful life of related customer relationships

Answer

The weighted average cost of debt for the entity

Answer

The replacement cost of internally developed branding materials

Question 4

Which of the following is NOT a recognized category of intangible assets under ASC 805?

Accepted Answer

Entity-related goodwill

Answer

Marketing-related intangibles

Answer

Customer-related intangibles

Answer

Technology-based intangibles

Question 5

Contributory asset charges (CACs) in the MPEEM represent:

Accepted Answer

Returns on and of all supporting assets used to generate the earnings attributable to the subject intangible

Answer

Amortization of the subject intangible asset over its useful life

Answer

Transaction costs incurred when acquiring supporting tangible assets

Answer

The tax benefit derived from amortizing acquired intangibles under IRC Section 197

Question 6

Under ASC 350, goodwill impairment testing for public companies after the ASU 2017-04 simplification requires:

Accepted Answer

A one-step test comparing the carrying amount of a reporting unit to its fair value

Answer

A two-step test comparing carrying amount to implied fair value of goodwill

Answer

An annual qualitative assessment followed by a mandatory quantitative step

Answer

Comparison of book value of goodwill to its replacement cost

Question 7

A 'with-and-without' method is most appropriate for valuing which type of intangible asset?

Accepted Answer

Non-compete agreements

Answer

Assembled workforce

Answer

In-process research and development

Answer

Developed and patented technology