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Inventory vs. Fixed assets

baha M's Profile

Dear All,
I have question!
If the company maintains stock available for sale (Machines) that is normally classified as inventory (current assets)
due to some increasing demand in the rental department the company decided to rent out the machines from the inventory without reclassify the assets to fixed assets (non current) due to the urgency and temporary nature of this rental.
the income generated from this temporary rental was shared between both departments and recognized as other income.

This practice is very frequent.
from operational point of view, its an extra income and the machines are already idle in stock, so, no harm in renting out.

Is this is acceptable accounting wise?????


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