Section 4433 of the CPA Canada Handbook Contains an Exemption

question 59

Multiple Choice

Section 4433 of the CPA Canada Handbook contains an exemption from capitalizing and amortizing all fixed assets for an NFPO that has revenues below $500,000. If the NFPO's revenues subsequently increase to over $500,000 over a two year period, which of the following statements is TRUE?

• A) The NFPO ceases to be a small NFPO but it is only required to capitalize and amortize if the increase in revenue is sustained for a period of two years.
• B) The NFPO ceases to be a small NFPO and it must capitalize and amortize on a retroactive basis to allow for comparative financial statements.
• C) The NFPO ceases to be a small NFPO but it does not need to adopt the policy of capitalizing and amortizing if that policy does not meet the needs of the financial statement users.
• D) The NFPO ceases to be a small NFPO and must capitalize and amortize on a prospective basis.

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Definitions:

NADH

Nicotinamide adenine dinucleotide (NADH) is a coenzyme found in all living cells, involved in redox reactions and energy production through cellular respiration.

Glycolysis

The metabolic pathway that breaks down glucose into pyruvate, releasing energy and pyruvic acid, occurring in the cytoplasm of cells.

Niacin

Also known as Vitamin B3, it is essential for converting food into energy, maintaining skin health, and supporting the nervous and digestive systems.

Pellagra

A vitamin deficiency disease most commonly caused by a lack of niacin (vitamin B3) in the diet, leading to dermatitis, diarrhea, dementia, and even death if untreated.