I'm not sure if this has been done before over here, but I've seen this game at a couple of other forums. It's simple to play. It can get amusing too, depending on the acronym. I'm going to put the starter one down here:
Now, someone must pick a one of the words that I put together out of TRON, to make another acronym. Then the next person picks a word out of his or her acronym and makes another one out of what chosen word he or she chooses.
It's cool if you want to slip a small word next to one (or two) of the important words. More than two extras, as well as doing so all too often would be considered as cheapening the creative process when acronym building.
Have fun! Getting silly with whatever acronyms you put together is part of what makes this entertaining.