If the Total Acquisition Value of an Acquired Not-For-Profit Organization

question 9

Multiple Choice

If the total acquisition value of an acquired not-for-profit organization is greater than the fair value of all identifiable net assets of the organization, and that organization's revenues are not earned by dues or other types of earned revenues, then the excess of acquisition value over identifiable net assets is immediately reported:

• A) As goodwill on the consolidated balance sheet.
• B) As a pro-rata increase to the identifiable assets and liabilities acquired.
• C) As a direct reduction in unrestricted net assets on the balance sheet.
• D) As a reduction in unrestricted net assets on the statement of activities.
• E) As an increase in other assets on the balance sheet.

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Definitions:

Marginal Subcontracting Cost

The additional cost incurred for each unit of production outsourced to a third party, rather than produced in-house.

Layoff Cost

The financial impact associated with reducing a company's workforce, including severance pay, unemployment benefits, and potential legal costs.

Hiring And Training Cost

Expenses associated with recruiting new employees and providing them with the necessary training to perform their job.

Labor Hours

The total number of hours worked by employees during a certain period, often used to measure productivity.