ASA Intangible Asset Valuation 2

Question 1

Which valuation approach is most appropriate for valuing a patent on a new pharmaceutical compound?

Accepted Answer

Income approach using discounted expected future royalties or profits

Answer

Cost approach using replacement cost new less depreciation

Answer

Market approach using comparable patent license transactions

Answer

Net asset value approach based on R&D expenditures

Question 2

The economic useful life of an intangible asset is best defined as:

Accepted Answer

The period over which the asset is expected to contribute to future cash flows

Answer

The statutory or legal life of the asset as granted by law

Answer

The amortization period assigned by the accountant for tax purposes

Answer

The remaining contractual term of the licensing agreement

Question 3

Customer attrition rates are most directly used in valuing which intangible asset?

Accepted Answer

Customer relationships

Answer

Trade names

Answer

Developed technology

Answer

Non-compete agreements

Question 4

In a purchase price allocation, which accounting standard requires acquirers to recognize intangible assets separately from goodwill if they meet the contractual-legal or separability criteria?

Accepted Answer

ASC 805

Answer

ASC 350

Answer

ASC 820

Answer

ASC 360

Question 5

The 'greenfield method' in intangible asset valuation is most commonly used for:

Accepted Answer

Concession arrangements or licenses to operate a business

Answer

Customer relationships with long-term contractual terms

Answer

Assembled workforce valuation in a startup context

Answer

Trade secret valuation in a regulated industry

Question 6

When valuing trade names using the relief-from-royalty method, the royalty rate is typically applied to:

Accepted Answer

Revenues

Answer

Operating income

Answer

Net income after tax

Answer

Earnings before interest and taxes (EBIT)

Question 7

Non-compete agreements are most commonly valued using:

Accepted Answer

The lost profits or with-and-without method

Answer

The relief-from-royalty method applied to projected revenues

Answer

The multi-period excess earnings method (MPEEM)

Answer

The replacement cost method based on training expenditures