BCA Business Asset Identification & Classification Flashcards
6 cards from real BCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 BCA Business Asset Identification & Classification flashcards as text
Under purchase price allocation (PPA) for a US business acquisition, which standard guides the identification and classification of acquired intangible assets?
Answer: GAAP ASC 805 (Business Combinations)
ASC 805 requires acquirers to identify and measure all acquired assets and liabilities, including intangible assets, at fair value as of the acquisition date.
A BCA appraiser identifies a 'non-compete agreement' as part of a business sale. How is this typically classified?
Answer: Contractual intangible asset
Non-compete agreements are contractual intangible assets because their value derives from a legally binding contract restricting competitive activity.
What distinguishes an 'identifiable intangible asset' from goodwill in BCA practice?
Answer: Identifiable intangibles can be separated from the business or arise from contractual rights
Identifiable intangibles meet the separability or contractual-legal criterion under GAAP and can be valued individually, unlike goodwill which is the residual value.
When performing a BCA engagement for a professional services firm, why is separating personal goodwill from enterprise goodwill especially important?
Answer: Personal goodwill may not transfer with the business, affecting marketable value and deal structure
In professional services firms, much of the goodwill may be tied to a specific individual and would leave with them, reducing the enterprise's transferable value.
Which of the following is an example of a 'customer-related intangible asset' in BCA?
Answer: Customer lists and backlog
Customer lists, relationships, and order backlog are customer-related intangibles that represent the economic value of existing customer connections.
A BCA appraiser is valuing a technology company and identifies capitalized software. How is internally developed software typically classified for appraisal purposes?
Answer: Intangible asset (technology-based)
Internally developed software is a technology-based intangible asset, valued using cost or income approaches depending on its stage and commercial use.