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:

Traceable Fixed Expense

Fixed costs that can be directly linked to a specific department, product, or segment and would disappear if the related operation ceased.

Traceable Fixed Expense

Fixed costs that can be directly linked to a specific business segment and would disappear if the segment was discontinued.

Price Reduction

The act of lowering the selling price of goods or services, often to stimulate demand, clear out inventory, or respond to market competition.

Target Costing

A pricing method that involves determining the desired cost for a product to ensure profitability at its anticipated selling price.