A Trust Document Does Not Define Income or Principal

question 77

Essay

A trust document does not define income or principal. The state in which the trust is operated has adopted the Uniform Act, including allocation of depreciation to income. The trust reports the following:
Net business profits $20,000
Net rental income 5,000
Proceeds from stock sale
(including $10,000 gain) 50,000
Trustee fee (charged to income) 2,000
Depreciation 3,000
What is the amount of the trust's net accounting income?

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Definitions:

Current Accounting Regulations

The prevailing rules and standards that govern how financial records are maintained and reported, varying by jurisdiction and overseen by regulatory bodies.

Non-current Assets

These are assets held for long-term use in a business, not expected to be converted into cash within one year, such as property, plant, and equipment.

Separate Disclosures

Financial statement notes or sections that provide additional detail on specific items not fully explained within the main financial statements.

Depreciation Expense Adjustment

Accounting practice of spreading out the cost of a tangible asset over its useful life.