1. What is business valuation and what is its role in accounting?

- Business Valuation in my own understanding, is a process that determines the estimate

economic value of one’s interest (usually owners) in a business, valuation is also used in
financial market to determine the price they are willing to pay and able to or receive to
complete a sale in a business
- The role of Business valuation in accounting is that it is used like a tool, because it uses
process and procedure to determine a certain value of a certain economic asset, thus, it can
use by an accountant to settle disputes such as estate and gift taxation and interest between
partners in buy and sell agreements, it can also be used to measure the best estimate close
to accuracy, to further explain the standard and basis, usually it is accompanied by a
valuator or a business appraiser to determine its correctness.
2. Briefly describe the following terms:

- Economic Conditions
 Economic condition in valuation is the condition existing as of the valuation
date, as well as the conditions of the industry in which the subject business
operates
 An economic condition is a state in macro-economy, whereas, it describes how
the market as of today; this describes the monetary trends and variables in a
certain economy, such as the general level increase in prices, inflation, deflation
and such others that determines how the market is operating.
- Appraisal Report
 In the process of acquiring or selling an asset, particularly a real estate asset
and alike, it also has a corresponding appraisal report, as such, appraisal report
is a written report that estimates the current fair market value of the
property/asset that we acquire or sell.
- Financial Analysis
 A financial analysis is assessment of the viability, stability and profitability of a
business, in valuation concepts and methods it generally includes common size
analysis, ratio analysis, trend analysis and comparative analysis that helps asses
the standing of the financial standing base on projection and help assess the
risk involved
 It compares two different periods to have a feasible and accurate financial
analysis, it shows the liquidity of the company cash flow, capital structures and
other factors that determines the financial standpoint of the business.

- Normalization
  Normalization is the process of organizing data in the database or in the
analysis, it is used to eliminate the redundancy from a set of data relation,
anomalies and undesirable excess data
 As such normalization in financial statements is identifying the ability of the
business to generate income for its owners. A measurement of income is the
amount of cash flow that the owners can remove from its business
 Normalization has many methods of adjustments such as comparability
adjustments, Non-operating adjustments, Non- recurring adjustments and
discretionary adjustments.
- Intrinsic Value
 It is the measure of business value that reflects the investor's in-depth
understanding of the company's economic potential.
- Fair Value
 Fair value or also known as fair market value, it is the value wherein, a willing
buyer and a willing seller can purchase or sell, with the full disclosure of
relevant facts and knowledge about the certain asset that it assesses.
- Valuation Premises
 Valuation premises are going concern, assemblage of asset, orderly
disposition and liquidation.
 These theories/standards are the basis in the valuation premises
 When calculating fair value, we follow a certain valuation premises
 In use- if the asset would provide maximum value to participants and in
exchange- if asset would provide maximum value to the market participants in
standalone basis.
 In conclusion, the premise on valuation differs and can vary depending on
what standards we are going to use, as such, there are different
interpretations and different choice we can make, thus, in the reality, we used
what best fits in our needs to achieve the optimal result we desire.