Little Trust, Whose Trust Instrument Is Silent with Respect to Depreciation

question 33

Essay

Little Trust, whose trust instrument is silent with respect to depreciation, collects rental income of $20,000 and pays property taxes of $1,000. Depreciation expense is $5,000.
Little Trust is in a state where all depreciation is charged to principal. What is the trust's net accounting income?

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard cost of variable overhead allocated for the actual production level.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (standard) variable overhead based on actual production levels.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard overhead estimated, based on the actual level of activity.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard variable overhead based on the actual level of activity, reflecting efficiency in using overhead resources.