VALUATION METHOD

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

16. A firm reported current assets of Php 1,000,000, which can be liquidated at 80 percent of book value, Total liabilities, including preferred stock, equal Php 270,000. The firm has 20,000 shares of common stock outstanding. What is the liquidation value per share of common stock?*

Php 50.00

Php 40.00

Php 36.50

Php 26.50

17. How much is the net working capital as of December 31, 2020?*

Php247,500

Php350,000

Php497,500

Php937,500

18. How much is the book value per share as of December 31, 2020?*

Php1.93

Php1.54

Php 1.25

Php1.00

19. How much is the book value of Hercules Company as of December 31, 2019?*

Php1,250,000

Php 1,650,000

Php2,150,000

Php3,050,000

20. How much is the book value per share in 2019?*

Php3.05

Php2.15

Php1.65

Php1.25