Certified Valuation Analyst CVA Valuation of Intangible Assets

Question 1

Under the purchase price allocation (PPA) process in business combinations, intangible assets are recognized separately from goodwill when they:

Accepted Answer

Arise from contractual or legal rights, or are separable from the business

Answer

Are internally generated by the acquirer

Answer

Have a useful life of less than one year

Answer

Relate only to tangible property

Question 2

The Relief from Royalty method is most commonly used to value:

Accepted Answer

Trade names and trademarks

Answer

Customer relationships

Answer

Non-compete agreements

Answer

In-process research and development

Question 3

The Multi-Period Excess Earnings Method (MPEEM) is primarily used to value:

Accepted Answer

A primary intangible asset driving business value, such as customer relationships

Answer

Real property associated with the business

Answer

Short-term supply contracts with fixed pricing

Answer

The assembled workforce

Question 4

Contributory asset charges (CACs) in the MPEEM are used to:

Accepted Answer

Remove the return on other assets so that only the earnings attributable to the subject intangible remain

Answer

Add back depreciation on tangible assets to normalize earnings

Answer

Increase the discount rate applied to the intangible asset

Answer

Estimate the replacement cost of the intangible asset

Question 5

Goodwill in a business combination under GAAP is defined as:

Accepted Answer

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

Answer

The present value of future earnings of the acquired company

Answer

The book value of the target company's equity at acquisition

Answer

The fair value of customer lists and trade names combined

Question 6

The useful life assigned to a customer relationship intangible in a PPA is typically based on:

Accepted Answer

Historical customer attrition rates and expected revenue decay patterns

Answer

The statutory copyright or patent term

Answer

The acquirer's fiscal year end for accounting convenience

Answer

The age of the oldest customer on the acquired company's books