CVA Valuation of Intangible Assets Flashcards
6 cards from real Certified Valuation Analyst practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CVA Valuation of Intangible Assets flashcards as text
The Greenfield Method for valuing intangibles starts with the premise that:
Answer: The business starts with only the subject intangible and builds cash flows from zero
The Greenfield Method models the revenue ramp-up and costs of building a business from scratch using only the subject intangible, valuing it as the present value of that build-out scenario.
Under fair value measurement (ASC 820), which level of inputs is considered most reliable for intangible asset valuation?
Answer: Level 1 (quoted prices in active markets)
ASC 820 establishes a three-level fair value hierarchy with Level 1 (active market prices) being most reliable, though intangibles usually require Level 3 inputs due to lack of market data.
A customer backlog intangible represents:
Answer: Existing signed contracts or purchase orders that have not yet been fulfilled
Customer backlog is a contractual-legal intangible consisting of firm purchase orders or contracts in hand at the acquisition date that will generate near-term revenue.
In a marital dissolution case, the treatment of personal goodwill is significant because:
Answer: Personal goodwill may be excluded from the marital estate in many states, reducing the value subject to division
Many states hold that personal goodwill is a non-marital asset belonging to the professional spouse, so its segregation and quantification can significantly reduce marital estate value.
When valuing an in-process research and development (IPR&D) asset in a PPA, the analyst should:
Answer: Use a higher discount rate than for completed technology to reflect the additional development and commercialization risk
IPR&D carries technical and commercial completion risk beyond that of completed technology, requiring a risk-adjusted discount rate that reflects probability-weighted success scenarios.
The 'royalty savings' in the Relief from Royalty method are typically:
Answer: Projected revenues multiplied by the royalty rate, tax-affected, and discounted to present value
The method computes the after-tax royalty savings across the intangible's remaining economic life and discounts them at an appropriate rate to yield present value.
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