Explain and account for the distinction between principal and income in the context of estate and trust accounting.

Q: When recording the inventory of an estate, the assets of the estate are recorded net of the…

A: Inventory is regarded as the items that are kept in a business that are used for sales or the…

Q: What assets are normally included as estate properties?

A: Probate laws: After the death of a decedent, in order to seek the problems of how his property…

Q: cases would affect the current assets portion of the balance sheet

A: First option is wrong because when Current Tax Expense > Tax Payments, there is a current…

Q: At what value are the assets within an estate reported?

A: Assets: Assets are those items that provide value for money and future economic benefit for an…

Q: What capital gains are subject to capital gains taxation?

A: The  сарitаl  gаins  tаx  is  the  levy  оn  the  рrоfit  frоm  аn  investment  thаt  is  inсurred…

Q: Q: What amounts are deducted from the gross estate of a decedent? Please, include specific examples.…

A: The gross estate refers to the total value of all assets owned by a deceased person at the time of…

Q: How is sale of property recorded in individual taxation? What are the classifications of property…

A: Individual taxation involves the assessment and collection of taxes on income, capital gains, and…

Q: Describe the procedures for determining after-tax net cash flows in taxable situations?

A: Net cash flow after tax is an important measure used for the purpose of evaluation of company's…

Q: In accounting for an estate or trust, how is the distinction between principal and income…

A: In accounting for an estate or trust, principal means the property or assets which have been…

Q: Briefly summarize the differences between principal and income transactions for estates and trusts .…

A: In simpler terms estate indicates the property owned by an entity.  In accounting terms the estate…

Q: Explain and what is the calculation of the following. Total Assessable income Deductions Total…

A: Tax has to be paid by all people and entities whose income or earnings crosses that minimum tax…

Q: What are the responsibilities of the executor of an estate?

A: Anyone can be an executor. It is usually one of the nominees or the person benefitting from the…

Q: Differentiate between the ‘definition of assets’ and ‘recognition criteria of assets’ provided in…

A: The financial position of the company can be arrived from the income statement prepared by the…

Q: What is the proper methods of accounting for and administering an estate and the corresponding legal…

A: Estate planning: When a discussion arises on estate planning, accounting of the same means to…

Q: Explain the meaning of Estate.

A: Accounting: Accounting is a system, or a process of collecting and organizing economic transactions,…

Q: Describe the depreciation procedures used in income taxation

A: The question deals with the depreciation procedures used in income taxation.

Q: Accounting for property dividends and accounting for property payables explanation and example.

A: Answer: Accounting for Property dividends covers the dividend paid to investors in form of assets.…

Q: What is the role of trusts in estate planning?

A: The process of managing the assets of an individual or an organization until the death of the…

Q: Differentiate between Current Account vs Capital Account.

A: Account: A record, that documents or records the changes in assets, liabilities, or equity for a…

Q: Why is the distinction between principal and income so important in accounting for most trusts?

A: Meaning of trusts A trust refers to a legal arrangement between the trustee or third party and the…

Q: What are the Required disclosures about each major class of capital assets?

A: Capital asset refers to the assets with a longer useful life i.e. more than a year and is not…

Q: Define Property dividend.

A: Definition:   Dividends: The dividend is the income of the shareholders for their shareholdings in…

Q: Explain Transfer of Property or a Beneficial Interest in Borrower?

A: The question is based on the agreement of Mortgage loan in real estate deal.

Q: Explain the method of direct capitalization method?

A: The three approaches to value a business or an investment are the Income based,  Market based and…

Q: income of the trust to beneficiaries is considered as a. Taxable b. Allowable

A: The question is related to distributed income of the trust to beneficiaries. A trust is an…

Q: What is ascertained from the income and expense of an entity?

A: Profit and Loss is the difference between income or expense.  If income is more than the expense, it…

Q: Describe the financial statements and journal entries utilized to account for estate and trust…

A:

Q: If an entity wants to account for investment property, it may choose between two accounting models.

A: The valuation of investment property is a must have feature in the presentation of the company’s…

Q: In the initial accounting for an estate, why does the executor record only the assets?

A: Estate: Estate consists of the net worth of the individual. It includes all the land possession,…

Q: Briefly discuss the rules related to distributions of noncash property.

A: The seven rules related to distributions of non cash property are as follows: 1. The distribution…

Q: What is the purpose of the charge and discharge statement that the executor of an estate issues?

A: Charge and Discharge Statement: To show the progress of the settlement of the estate, the executor…

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.