BCA BCA Business Asset Identification & Classification 2

Question 1

Under purchase price allocation (PPA) for a US business acquisition, which standard guides the identification and classification of acquired intangible assets?

Accepted Answer

GAAP ASC 805 (Business Combinations)

Answer

ASC 805 requires acquirers to identify and measure all acquired assets and liabilities, including intangible assets, at fair value as of the acquisition date.

Question 2

A BCA appraiser identifies a 'non-compete agreement' as part of a business sale. How is this typically classified?

Accepted Answer

Contractual intangible asset

Answer

Non-compete agreements are contractual intangible assets because their value derives from a legally binding contract restricting competitive activity.

Question 3

What distinguishes an 'identifiable intangible asset' from goodwill in BCA practice?

Accepted Answer

Identifiable intangibles can be separated from the business or arise from contractual rights

Answer

Identifiable intangibles meet the separability or contractual-legal criterion under GAAP and can be valued individually, unlike goodwill which is the residual value.

Question 4

When performing a BCA engagement for a professional services firm, why is separating personal goodwill from enterprise goodwill especially important?

Accepted Answer

Personal goodwill may not transfer with the business, affecting marketable value and deal structure

Answer

In professional services firms, much of the goodwill may be tied to a specific individual and would leave with them, reducing the enterprise's transferable value.

Question 5

Which of the following is an example of a 'customer-related intangible asset' in BCA?

Accepted Answer

Customer lists and backlog

Answer

Customer lists, relationships, and order backlog are customer-related intangibles that represent the economic value of existing customer connections.

(BCA) Business Certified Appraiser Practice Test

(BCA) Business Certified Appraiser Practice Test

BCA BCA Business Asset Identification & Classification 2