Reading 44: Private Company Valuation-LOS b 习题精选 2010, statements, companies, describes, following

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Session 12: Equity Investments: Valuation Models
Reading 44: Private Company Valuation

LOS b: Explain the reasons for valuing the total capital and/or equity capital of private companies.

 

 

 

Which of the following statements best describes the use of valuations for private firms in bankruptcy?

A) Valuations are used for liquidations but not reorganizations.

B) A valuation can help determine the firm’s future course.

C) Valuations are not usually used for private firms in bankruptcy due to the difficulty in valuing them.

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For private firms in bankruptcy, a valuation can help determine whether the firm should be liquidated or reorganized. If it is determined that the firm can be maintained as a going concern, the valuation process can help in its restructuring.

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Which of the following statements best describes how appraisals are performed?

A) Because of industry requirements, appraisers use the same appraisal process regardless of the purpose.

B) Because of government requirements, appraisers use the same appraisal process regardless of the purpose.

C) Most appraisers specialize in a single area.

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Because the valuations for transactions, compliance, and litigation are quite different, most appraisers specialize in a single area.

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Which of the following statements best describes the use of valuations in private firms?

A) Due to the uncertainty of private firm valuation, valuations involving stock-based compensation are rarely performed.

B) If a private firm gives its employees share based payments, a valuation should be performed.

C) Although they are needed for financial reporting purposes, valuations are not used to value stock options because private firms do not grant options.

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If a firm gives its employees share based payments such as stock options and restricted stock grants, a valuation will have to be performed for accounting and tax purposes. Stock can also be granted using employee stock ownership plans.