ABV (Accredited business valuation) exam questions & answers 2024/2025
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ABV
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ABV
ABV (Accredited business valuation) exam questions & answers 2024/2025
Valuation engagement - ANSWERS- results expressed as conclusion of value
-applies methods as deemed appropriate
calculation engagement - ANSWERS- expressed as calculated value
- client and analyst agree on methods to b...
ABV (Accredited business valuation)
exam questions & answers 2024/2025
Valuation engagement - ANSWERS- results expressed as conclusion of value
-applies methods as deemed appropriate
calculation engagement - ANSWERS- expressed as calculated value
- client and analyst agree on methods to be used
Under SSVS No. 1: professional competence, an analyst should consider - ANSWERSa. subject entity and
its industry
b. subject interest
c. valuation date
d. scope of the valuation engagement
e. government regulations
New levels of value chart: - ANSWERS-control strategic (public or private CO.)
-Minority or control standalone liquid (public CO.)
-Control liquid (private CO.)
-Control standalone (private CO.)
-minority non marketable (private CO.)
Fair market value attributes - ANSWERS-willing buyer
-willing seller
-neither under compulsion
-assumes typical hypothetical buyer and seller
- a price equitable to both
- assumes both buyer and seller have equitable knowledge
,- assumes reasonable knowledge of both parties
- applicable to controlling interest or minority blocks
-applies to all federal tax valuation
Fair value attributes - ANSWERS-not always a willing buyer
- not a willing seller
- buyer not always compelled; seller under compulsion
- impact of the proposed transactions not considered
- the concept of fairness to the seller a possible consideration
-Applicable to minority blocks
- the most common value standard in state dissenting and oppressed shareholder statutes.
Fair market value: applicable standard of value - ANSWERS-gift and estate tax
- inheritance taxes
- Ad valorem taxes
- ESOPs
- Financial acquisitions
Fair value: applicable standard of value - ANSWERS- dissenting stockholder actions
- corporate or partnership dissolutions under minority oppression status
- going private
sources to quantify a control premium - ANSWERS- control premium study
- Factset Mergerstat review
- Mergerstat/BVR control premium study
- Direct investments spectrum
- Partnership Profiles
- Morningstar Principia closed end funds
, Discount for lack of control formula - ANSWERS1-(1/(1+avg prem paid))
Revenue ruling 93-12 - ANSWERSruling concluded that the family relationship was not to be taken into
account in the determination of the value of the gifts. Implies appropriate discounts for marketability
and minority can be taken.
Revenue ruling 59-60 - ANSWERSoutline methods, approaches, factors to be considered in valuing the
shares of closely held corporations. The ruling applies to valuations performed for estate and gift tax
purposes and to valuation of stock on which market quotations are either unavailable or not reflective of
fair market value.
Revenue ruling 65-192 - ANSWERSsuggests broad application of RR 59-60 for valuations for all tax
purposes
Revenue ruling 65-193 - ANSWERSModifies revenue 59-60 by recognizing the possibility of valuing the
tangible and intangible assets of a business separately
Revenue ruling 68-609 - ANSWERSdiscusses a formula approach (excess earnings method) for valuing the
fair market value of the intangible assets of a business.
Revenue ruling 77-287 - ANSWERSaddresses the discount for lack of marketability inherent in the
valuation of shares of stock that have not been registered for public trading when the issuing company
has stock of the same class that is actively traded on one or more securities markets.
revenue ruling 80-213 - ANSWERSfurther amplifies revenue ruling 59-60, as modified by discussing the
valuation of stock of a subsidiary corporation that is distributed to shareholders of the former parent and
can be sold only with the stock of the distributing corporation.
TAM 94360005 - ANSWERSIRS continues to fight discounts related to family businesses
Average discount for a restricted/non-marketable shares - ANSWERSrestricted stock studies indicate
significant discount of between 25%-35%
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