TRUE OR FALSE

1. Risk identification is important to allow investors to assess impact of the risk to their investment. True False

2. Asset has been defined by the industry as transactions that would yield future economic benefits as a result of past transactions. True False

3. Equipment is classified as non-current assets. True False

4. Fair Market value is the term used to describe the value derived from the amounts reflected in the financial statements. True False

5. If there is no comparable assets found in the market, it is more appropriate to use replacement value method. True False

6. Brown field investment is the term used to describe businesses that are starting from scratch. True False

7. Replacement cost is the cost of similar assets that have the nearest equivalent value as of the valuation date. True False

8. For real properties, it is more important to look at the age of the asset than its size. True False

9. Replacement value is an estimate of cost of reproducing, creating, developing or manufacturing a similar asset. * True False

10. Replacement value method is superior to book value as it gives an indication of true value of the firm as of the valuation date. * True False

11. Insurance companies use replacement value as basis to determine the appropriate insurance premium to be charged to their clients. * True False

12. To get book value per share, total liabilities is deducted from total assets and the resulting figure is divided by total authorized shares * True False

13. Borrowings that are contracted to be paid after 24 months is classified as current liabilities. * True False

14. Book value method is a transparent approach since value can be easily verified by looking at the financial statements * True False

15. Brown field investments are easier to evaluate as information is already available from prior years * True False

MCQ

1. The main basis to determine the value of the insurance premium to be paid to cover the risk for an asset is*

Original acquisition cost

Replacement cost

Book value as of premium payment date

Acquisition cost less accumulated depreciation and impairment losses

2. The net book value of assets may also represent*

Total shareholder's equity

Total assets

Total liabilities

Total long-term debt

3. Receivables that are collectible after 60 days are classified as*

Current Liabilities

Non-current Liabilities

Current Assets

Non-current Assets

4. Cost of similar assets that have the nearest equivalent value as of the valuation date.*

Book value

Replacement cost

Fair market value

Reproduction value

5. These are investments which are already in the going concern state, as most business are in the optimistic perspective that they will grow in the future because of historical proof*

Green Field Investments

Brown Field Investments

Blue Field Investment

Black Field Investments

6. The factor that affects the replacement value of an asset are the following except*

Competitive advantage of the asset

Size of the asset

Original acquisition cost of the asset

Asset age

7. This refers to the value recorded in the accounting books of a firm as reflected in the audited financial statements*

Exit value

Book value

Earnings per share

Fair market value

8. When determining replacement costs of assets, valuators tend to consult with*

Actuaries

Board of Directors

Appraisers

Equity Analysts

9. One of the advantages of using asset-based methods in valuation is*

Relies on the ability of the firm to generate revenues in the coming years

Considers future cash flows that can be derived from the use of assets

Incorporates how the market perceives the value of the company

Enables stakeholders to validate firm value based on the value of assets it currently own

10. Book value also reflects the company's*

Historical value

Liquidation value

Intrinsic value

Fair market value

11. The following describes the benefits of having a sound Enterprise-wide Risk Management system except*

Facilitates elimination of all business risks

Manage performance variability

Enhance business resilience against changes

Improve distribution of resource across the firm

12. The use of reproduction value method is appropriate for the following, except*

When calculating value of new technology or start-up businesses

Ventures with highly specialized equipment

Companies that are highly reliant with intangible assets

Businesses that use equipment supplied by third-party manufacturer

13. This has been defined by the industry as transactions that would yield future economic benefits as a result of past transactions*

Asset

Equity

Net Assets

Shares of Stocks

14. Book value and replacement values of an asset are theoretically different. The difference of these two is*

Book value is based on the historical acquisition costs while replacement value is based on the net asset value as of balance sheet date.

Book value can be computed from the financial statements while replacement value is gathered by employing services of an appraiser

Book value is computed on a per share basis, but replacement cost is shown as absolute values.

Book value includes cost allowances for gaps against market prices while replacement cost does not.

15. Using the book value has its advantages, the following statements provide them except*

Information necessary for computation can be quickly gathered

Validated by a third-party expert with knowledge on how much assets are sold in the open market

Shows a transparent view on firm value

Can easily be validated by reviewing the company's audited financial statements