The selection of an appropriate valuation method is a critical step in any valuation engagement. This decision is guided by high-level considerations that define the context and feasibility of the analysis. The purpose of the valuation (e.g., going concern, liquidation), the quality and availability of reliable data, and the analyst's professional judgment are all fundamental determinants. These factors dictate which approach and specific method will yield the most credible conclusion of value. In contrast, the specific financial asset account categories are merely the line items that will be analyzed and adjusted after a method has been selected; their existence does not drive the choice of the method itself.

A: The analyst's experience and professional judgment are paramount in selecting the most suitable method based on the unique facts and circumstances of the engagement.

B: The feasibility of any asset-based method is directly contingent upon the availability and reliability of data needed to adjust individual assets and liabilities to fair value.

C: The purpose of the valuation establishes the standard and premise of value, which are primary drivers in determining the appropriate valuation approach and method.

1. Hitchner, J. R. (2017). Financial Valuation: Applications and Models (4th ed.). In Chapter 3, "Valuation Approaches and Methods," the text emphasizes that the selection of methods is based on factors such as the purpose of the valuation, the availability of data, and the specific characteristics of the subject interest, all of which require the analyst's professional judgment. The specific accounts are inputs to the chosen method, not determinants of it.

2. NACVA. (2023). Fundamentals, Techniques & Theory (FT&T). The core training material for the CVA designation repeatedly states that the valuation process involves selecting appropriate methods based on the purpose and nature of the engagement, the availability of information, and the analyst's judgment. For instance, Section IV, "Valuation Approaches/Methods," details how these factors guide the choice between asset, income, and market approaches.

3. AICPA. (2007). Statement on Standards for Valuation Services No. 1 (SSVS 1), Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset. Paragraph 34 states, "The selection of the valuation approaches and methods... is a matter of the valuation analyst’s professional judgment." The standard implicitly supports that this judgment is based on the purpose, available data, and other engagement-specific factors.