BVR - Understanding Business Valuation Chapter 1

Question 1

AICPA SSVS 1 (What does that mean?)

Answer 1

STATEMENT ON STANDARDS FOR VALUATION SERVICES NO. 1

Question 2

AICPA SSVS1 (Who does it apply to?)

Answer 2

Must be followed by all members of the AICPA

Question 3

General Standards Rule

Answer 3

a member shall “undertake only those professional services that the member or the member’s firm can reasonably expect to be completed with professional competence.”

Question 4

Two types of engagements to estimate value

Answer 4

Valuation and Calculation

Question 5

Valuation Engagement performed when

Answer 5

1. Estimate the value of the subject interest
2. applies the approaches and methods he or she deems appropriate
3. Results expressed as a conclusion of value (can be a range)

Question 6

Calculation engagement performed when

Answer 6

1. Valuation analyst and client agree on methods/approaches/procedures
2. Value is calculated in compliance with the agreement
   A calculation engagement does not include all of the procedures required for a valuation engagement.

Question 7

Hypothetical conditions

Answer 7

he or she should indicate the purpose for including the hypothetical conditions and disclose these conditions

Question 8

Information needed to perform a valuation

Answer 8

1. Nature of the subject interest
2. Scope of the valuation engagement
3. Valuation date
4. Intended use of the valuation
5. Applicable standard of value
6. Applicable premise of value
7. Assumptions and limiting conditions
8. Applicable governmental regulations or other professional standards

Question 9

What is the standard of value?

Question 10

What is the premise of value?