In appraising a hotel as a going concern, what must be allocated?
Correct Answer
B) The real property, personal property and intangibles
Why this is correct: The original explanation notes that a going concern includes real estate, personal property (furnishings), and intangible business value (e.g., brand, operating agreements). For a real estate appraisal, the value of the real property component must be allocated and isolated from the other components. Why the other choices are wrong: The value between land and the building alone is a cost approach allocation, not specific to a going concern. The income between the operator and the lender refers to income streams, not asset allocation. The depreciation across each building component is part of the cost approach, not the going-concern allocation. Exam tip: For a going concern, you must allocate value among real property, personal property, and intangibles.
Why This Is the Correct Answer
Why this is correct: The original explanation notes that a going concern includes real estate, personal property (furnishings), and intangible business value (e.g., brand, operating agreements). For a real estate appraisal, the value of the real property component must be allocated and isolated from the other components. Why the other choices are wrong: The value between land and the building alone is a cost approach allocation, not specific to a going concern. The income between the operator and the lender refers to income streams, not asset allocation. The depreciation across each building component is part of the cost approach, not the going-concern allocation. Exam tip: For a going concern, you must allocate value among real property, personal property, and intangibles.
More USPAP Questions
Reconciliation of the approaches to value is best described as which activity?
Why should the reconciliation address the quantity of evidence as well as its quality?
How long must a report be retained compared with the workfile?
What distinguishes an appraisal review from an appraisal?
An appraiser reconciles to a value at the top of the indicated range because the client needs that figure. What has occurred?
What does it mean that a value opinion must be reasonable rather than merely arithmetically derived?
What should the reconciliation section explain to the reader?
How do the content obligations of the two report options differ with respect to the information analyzed?
The three approaches indicate $480,000, $495,000 and $610,000. What should the appraiser do first?
Three approaches indicate $1.02 million, $1.05 million and $1.04 million. How should this be reported?
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