Certified Residential Appraiser Practice Exam

What is meant by market value of the going concern?

1. The value of the property being sold as is

2. The total market value of the business including all its assets

3. The value of the land only

4. The cost to replace the business assets

The correct answer is: The total market value of the business including all its assets

The concept of the market value of the going concern refers to the overall value of a business as an operating entity, encompassing not just the physical assets, but also intangible assets and goodwill that contribute to its profitability. This definition captures the economic potential and the ability of the business to generate income and sustain operations over time. Choosing this option reflects an understanding that the value is inclusive of all assets—such as equipment, inventory, and intellectual property—as well as the business's reputation and customer relationships. This holistic view distinguishes it from merely assessing the physical property or land on which the business operates. This broader perspective is important, especially for appraisers assessing business properties, as the true value to a buyer often lies in the business's capacity to continue producing revenue rather than just the physical assets or land alone.