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Commercial Pilot Licence (CPAER) – Canada · Question

How are donations and grants without externally imposed restrictions generally recognized in the financial statements of a not-for-profit organization under the CPA Canada Handbook - Part III?

For not-for-profit organizations, contributions without externally imposed restrictions are generally recognized as revenue when received or receivable, provide

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Question: How are donations and grants without externally imposed restrictions generally recognized in the financial statements of a not-for-profit organization under the CPA Canada Handbook - Part III?

Answer options:

  • Deferred revenue and recognized as expenses over time. ✅ Recognized as revenue when received or receivable, if the amount can be reasonably estimated.
  • Capitalized and amortized over their useful life.
  • Disclosed only in the notes to the financial statements.

Correct answer: Recognized as revenue when received or receivable, if the amount can be reasonably estimated.

Explanation: For not-for-profit organizations, contributions without externally imposed restrictions are generally recognized as revenue when received or receivable, provided that the amount can be reasonably estimated and collection is reasonably assured.

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