Explain how relative valuation works

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Reference no: EM131091667

Question 1

Depreciation is the systematic allocation of the cost of an asset over its estimated economic life. Generally, depreciation is an expense reported on the income statement. Why is it only generally an expense item reported on the income statement? Consider this question before responding: What must taxpayers do if depreciable equipment is used in the construction of capital improvements? What impact will it have on the depreciation of the equipment?

Separately, discuss whether it is possible to exclude property from the MACRS system (assume the property was placed in service after December 31, 1986). Provide an example specifying the nature of the business, type of property and the method that would be used.

Use the Internal Revenue Service's website at https://www.IRS.gov and its search feature to obtain additional information on depreciation.

Question 2

As we are bringing to a close everything we have learned over the past several modules, share with the class at least one important hint or tip that has helped you with a difficult concept. Also, if you could take any one piece of important information with you as you leave this class, what would it be? Why?

Question 3

Explain how "relative valuation" works. What are the primary steps involved in conducting comparable valuations? Give some examples of common valuation "multiples" used.

Reference no: EM131091667

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