QUESTION 9

• Fair Market Value is defined by the Internal Revenue Service in Revenue Ruling 59-60 as the price at which the property (business) would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell; both parties having reasonable knowledge of relevant facts.

• True

• False

2 points

QUESTION 10

• In regard to asset based valuation methods which of the following is false?

		Asset-based business valuation methods estimate the value of a business as the sum total of the costs required to create another business of equal economic utility.
		Asset-based business valuation methods are based upon the principle that a prudent investor would pay no more for an investment than the cost to obtain, either by purchase or construction, an investment of equal utility.
		The net assets asset-based business valuation method is based on the premise that value of an entity is based on the fair market value of the individual assets and liabilities of the entity.
		Asset-based business valuation methods determine the business value based on its earning power and risk.

2 points