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

question 32

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 earned revenue or whether it generates mostly contribution and investment revenue in the future.
• C) Whether the acquired not-for-profit entity has the ability to generate significant amounts of both earned revenues and 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. Goodwill can only be recognized in an acquisition of a for-profit entity.

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Definitions:

Chase

In molecular biology, refers to the follow-up procedure in a pulse-chase experiment, where the presence and movement of a molecule or compound is tracked over time after initial labeling.

Nucleotides

The basic building blocks of nucleic acids, such as DNA and RNA, consisting of a sugar, a phosphate group, and a nitrogenous base.

Information Storage

The retention of digital or analog information over time for the purpose of retrieval and use in the future.

Sequences

Ordered sets of elements or events following a specific rule or arrangement.