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:

Medication Abbreviations

Shortened forms of words or phrases used to specify drugs, dosages, and other medication-related information.

Joint Commission

An independent, non-profit organization that accredits and certifies healthcare organizations and programs in the United States to ensure compliance with specific performance standards.

Nursing Documentation

The detailed recording of information pertaining to the care given to patients by nurses, including assessments, interventions, and outcomes.

Otic Medications

Medications specifically formulated for administration in the ear, used to treat various ear conditions.