Certified Valuation Analyst CVA Valuation of Intangible Assets 1

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

ASC 805 requires separate recognition of intangibles that meet the contractual-legal or separability criteria, with remaining unallocated value classified as goodwill.

Question 2

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

Accepted Answer

Trade names and trademarks

Answer

The Relief from Royalty method values intangibles by estimating the royalty payments the company is 'relieved' from paying because it owns the asset, most naturally applied to trademarks.

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

MPEEM values the primary intangible by attributing to it the residual earnings after compensating all contributing assets (charges), making it well-suited for customer relationships.

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

CACs represent the required returns on all contributing assets (working capital, fixed assets, other intangibles), stripping them out to isolate the subject intangible's earnings contribution.

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

Goodwill is a residual — the purchase price paid beyond what can be allocated to individually identified and measured assets and liabilities.

Certified Valuation Analyst Practice Test

Certified Valuation Analyst Practice Test

Certified Valuation Analyst CVA Valuation of Intangible Assets 1