Question : 21) Which of the following statements true of fair value : 1222550

21) Which of the following statements is true of fair value as a standard of valuation?

A) It is the most widely recognized standard of value.

B) It does not propose a hypothetical sale in an open and unrestricted market.

C) It is mandated for all federal tax matters.

D) Its operational meaning does not vary from state to state because it is statutorily defined.

22) Which of the following standards of value is often used in dissenting minority interest in litigation?

A) fair value

B) fair market value

C) book value

D) investment value

23) Which of the following situations will result in the investment value of a business approximating to the fair market value of the business?

A) when an investor’s requirements and expectations are different than the fair value of the business

B) when an investor’s requirements and expectations are representative of the book value of the business

C) when an investor’s requirements and expectations are different than the market

D) when an investor’s requirements and expectations are representative of the market

24) Which of the following is true of the standards of value used in business valuation?

A) The fair value proposes a hypothetical sale in an open and unrestricted market.

B) The investment value is often used in dissenting minority interest litigation.

C) The book value of a business rarely represents its fair market value.

D) The fair market value is usually greater than the investment value.

25) Which of the following is true of investment value as a standard of valuation?

A) Investment value is usually lesser fair value.

B) Investment value is usually lesser than fair market value.

C) Investment value is usually greater than book value.

D) Investment value is usually greater than fair value.

26) Which of the following standards of value is also known as strategic value?

A) investment value

B) book value

C) fair value

D) fair market value

27) Which of the following methods is a logical selection when engaged to value a nonoperating company or a company pending liquidation?

A) net asset value method

B) dividend payout method

C) capitalization of earnings method

D) guideline transaction method

28) Which of the following methods is commonly used to establish a floor value for the company?

A) dividend payout method

B) capitalization of earnings method

C) net asset value method

D) guideline transaction method

29) Which of the following is true of the net asset method?

A) It requires the forensic accountant to adjust the company’s balance sheet from book value to fair market value.

B) It determines a company’s value as the difference between the book value of its assets and the fair market value of its liabilities.

C) It commonly requires the forensic accountant to use his or her judgment to arrive at the fair market value assessments.

D) It involves the development of a proxy benefit and the capitalization of this benefit to provide an indicated business value.

30) Which of the following valuation approaches employs the time value of money?

A) asset approach

B) liabilities approach

C) market approach

D) income approach