When an Acquisition Occurs in Not-For-Profit Accounting, Recognition of Goodwill

question 43

Multiple Choice

When an acquisition occurs in not-for-profit accounting, recognition of goodwill depends on:

• A) Whether control has been achieved by the acquiring not-for-profit entity.
• B) Whether the acquired not-for-profit entity has the ability to generate significant amounts of revenue from providing goods or services or from membership fees, or whether it is expected to generate primarily contribution and investment revenue in the future.
• C) Whether the acquired not-for-profit entity has the ability to generate significant amounts of revenues from goods or services or membership fees, as well as significant amounts of contribution revenues in the future.
• D) Whether the acquired not-for-profit entity has a history of generating significant revenues of any type.
• E) None of these answer choices are correct. Goodwill can only be recognized in an acquisition of a for-profit entity.

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Definitions:

Percent Format

A numeric format in spreadsheets or databases that displays values as a percentage, multiplying the actual number by 100 and adding a percent sign.

Field Size

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Table Datasheet

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