When a business being sold is no longer a going-concern due to declining profits, a liquidation value can be determined using
A)the earnings method.
B)the contingent business value method.
C)the annual gross revenues earned method.
D)the asset valuation approach.

Question

Quizplus · Accepted Answer

When a business is no longer a going-concern due to declining profits, the best method to determine its value is the asset valuation approach. This approach involves identifying and valuing all the tangible and intangible assets of the business, subtracting its liabilities, and arriving at a net asset value. This value represents the liquidation value of the business and is the amount that could be realized in the event of a forced sale or liquidation.

When a Business Being Sold Is No Longer a Going-Concern