During the year, a not-for-profit art gallery acquired a number of pieces for its collection. Which of the following choices for reporting the acquisitions is NOT in accordance with the CICA Handbook?
A)Immediate write-off.
B)Capitalize, but do not depreciate.
C)Capitalize and depreciate.
D)Note disclosure only.

Question

Quizplus · Accepted Answer

According to the CICA Handbook, not-for-profit entities are required to capitalize and depreciate assets that have a useful life greater than one year. Immediate write-off would not be in accordance with the accounting standards. Therefore, it is not a valid choice for reporting the acquisitions. The best choices would be B or C, depending on the useful life and depreciation policy for the acquired pieces. In some cases, note disclosure only may also be required, but it would not be a sufficient reporting option on its own.

During the Year, a Not-For-Profit Art Gallery Acquired a Number