In Verifying the Amount of Goodwill Recorded by an Entity

question 25

Multiple Choice

In verifying the amount of goodwill recorded by an entity, the most convincing evidence that an auditor can obtain is by comparing the recorded value of assets acquired with the:

• A)assessed value as evidenced by tax bills.
• B)seller's book value as evidenced by financial statements.
• C)insured value as evidenced by insurance policies.
• D)appraised value as evidenced by independent appraisals.

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Definitions:

Fund Accounting

A system of accounting used primarily by non-profit or governmental organizations where resources are categorized into funds according to their designated purpose or restrictions.

Not-for-Profit Organizations

Entities that operate for purposes other than generating profit, focusing instead on social, educational, or charitable objectives.

Restricted Fund Method

An accounting practice where funds are designated for specific purposes and are restricted from general use.

Donation Revenue

Income received from donations, often pertaining to non-profit organizations.