PART 8--QUICK QUIZ

Circle your responses:

T	F	1.	Book value is the total value of all assets of a business as such assets are valued for accounting purposes.
T	F	2.	Book value is generally accepted by the IRS when the business is valued for tax purposes
T	F	3.	Goodwill can be attributed to reputation, name recognition, location, effective management, or some combination of the above.
T	F	4.	When determining the earnings figure of a business for calculating its value using the capitalization-of-earnings method, it is appropriate to increase the earnings if unusually large salaries were paid to shareholder-employees.
T	F	5.	It is appropriate to give substantial weight to earnings forecasts far into the future when using the discounted-future- earnings (DFE) method of valuation.
T	F	6.	Some type of capitalization method is recommended if a personal-service company is being valued.
T	F	7.	Discounts are appropriate if the business being valued is a minority interest or contemplating liquidation.
T	F	8.	Goodwill is a significant value component of a liquidating business.
T	F	9.	It is generally important to consider the growth potential when valuing preferred stock.
T	F	10.	Family buy-sell agreements must meet any one of the following requirements if the price provision is to be binding on the IRS for estate tax purposes:

• It must have a bona fide business purpose.

• It must not be a device to transfer property to heirs for less than full fair market value.

• It must be comparable to similar agreements entered into at arm's length.

1-F, 2-F, 3-T, 4-T, 5-F, 6-T, 7-T, 8-F, 9-F, 10-F