C. D.
OUR LADY OF FATIMA UNIVERSITY
Dela Paz Norte, City of San Fernando (P) COLLEGE OF BUSINESS AND ACCOUNTANCY
Final Examination in APP III Accounting Proficiency Program III
11.
GENERAL INSTRUCTIONS: Shade the letter that corresponds to
your answer. STRICTLY NO CHEATING.
THEORIES:
Which is subject to creditable withholding tax? A. Winnings B. Dividends C. Professional fees D. Royalties 2. Withholding taxes are the primary liability of the: A. Earner or payee of income. B. Payor of income. C. Payee and payor of income. D. Collecting agency of the government. 3. A Canadian who is staying in the Philippines for more than one year is a: A. Resident alien. B. Non-resident citizen. C. Non-resident alien engaged in trade or business. D. Non-resident alien not engaged in trade or business. 4. Which is an incorrect statement regarding situs of income? A. Interest income is earned in the residence of the debtor. B. Royalty is earned where the intangible is employed. C. Service income is earned in the domicile of the taxpayer. D. Rent is earned in the location of the property. 5. A tax that is imposed upon the performance of an act, the enjoyment of privilege, or the engagement in a profession is known as: A. Income tax. B. License. C. Excise tax. D. Transfer tax. 6. Which of the following distinguishes license from tax? A. Unlimited in imposition B. Imposed for revenue C. Does not necessarily renders the business illegal in case of non-payment D. Pre-activity in application 7. Tax classifications as to object do not include: A. Poll tax. B. Property tax. C. Regulatory tax. D. Excise tax. 8. Which of the following is limited in application? A. Tax Laws B. Revenue Regulations C. Tax Treaties D. BIR Ruling 9. The principles of a sound tax s ystem exclude: A. Economic efficiency. B. Fiscal adequacy. C. Theoretical justice. D. Administrative feasibility. 10. The Bureau of Internal Revenue is authorized to do the following, except: A. Assess and collect national taxes. B. Issue receipts and clearances.
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Enforce all forfeitures, penalties, and fines. Mete out sentence of imprisonment for violation of Tariff and Customs Code. The Commissioner of Internal Revenue is not authorized to: A. Interpret the provisions of the National Internal Revenue Code. B. Promulgate Revenue Regulations. C. Terminate a taxable period. D. Prescribe presumptive gross receipts. The provisions in the Constitution regarding taxation are: A. Grants of the power to tax. B. Limitations to the power to tax. C. Grants and limitations to the power to tax. D. Limitations against double taxation. Which of the following violates Constitutional provisions? A. Payment of salaries to priests or religious ministers employed by the Armed Forces of Philippines. B. Imposing tax on properties of religious institutions which are not directly and exclusively used for religious purposes. C. Imposition of license for the sale of religious literature. D. Authorizing the President of the Philippines to fix the rates of tariffs or imposts. Which of the following normally pays real property tax? A. Bantay Bata, a non-profit educational institution. B. Jesus Crusade Movement, a religious institution. C. University of Pangasinan, a private proprietary educational institution. D. UVS Corporation, a registered trading company. Which is principally limited by the requirement of due process? A. Eminent domain B. Police power C. Taxation D. All of these Which of the following is not an inherent limitation of the power to tax? A. Tax should be levied for public purpose. B. Taxation is limited to its territorial jurisdiction. C. Tax laws shall be uniform and equitable. D. Government agencies and instrumentalities are exempt from tax. Which of the following is not within the scope of tax legislation? A. Fixing the imposable tax rate B. Assessment of the tax C. Determining the subject to be taxed D. Determining the purpose of the tax Which is not subject to income tax? A. Harvested fruits B. Sold crops C. Offset of indebtedness for services rendered D. Damages recovered in a patent infringement suit Which is not subject to final tax to a corporation? A. Interest income from foreign currency deposits. B. Royalty C. Prizes D. None of these Royalties on musical composition is subject to: A. 20% final tax B. 10% final tax C. 0% final tax D. Regular tax Which is subject to final tax?
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Share of the distributive net income of a general professional partnership. B. Active royalties. C. Prizes not exceeding P10,000. D. Interest income from foreign bank deposits. The term “capital assets” includes: A. Stock in trade or other property included in the taxpayer’s inventory. B. Real property not used in the trade or business of the taxpayer. C. Real property primarily use for the sale to customers in the ordinary course of trade or business. D. Property used in the trade or business of the taxpayer and subject to depreciation. Which is not taxable? A. Interest income in government securities. B. Interest income in long-term deposits but preterminated by the taxpayer prior to 5 years. C. Informer’s reward for the discovery of violatio ns to the provisions of the NIRC. D. Gains on redemption of shares in a mutual fund. Facilities or privileges furnished or offered by an employer to his employees that are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, goodwill, contentment, or efficiency of his employees. A. Fringe benefit B. Fringe benefit tax C. De minimis benefit D. Grossed-up monetary value The following fringe benefits are not subject to fringe benefit tax, except: A. Fringe benefits given to the rank and file employees, whether granted under a collective bargaining agreement or not. B. De minimis benefits, as defined in the rules and regulations to be promulgated by the Secretary of Finance, upon the recommendation of the Commissioner of Internal Revenue. C. Contribution of the employer for the benefit of the employees to retirement, insurance, and hospitalization benefit plans. D. Fringe benefits furnished or granted by the employer to its managerial and supervisory employees. The following fringe benefits are not subject to fringe benefit tax, except: A. If given for the convenience or advantage of the employee. B. Benefits given to rank and file employees. C. Contribution of the employer for the benefit of the employees to retirement, insurance, and hospitalization benefit plans. D. If required by the nature of or necessary to the trade, business, or profession of the employer. Which of the following taxpayers whose personal exemption is subject to the law of reciprocity? A. Non-resident citizen with respect to his income derived outside the Philippines. B. Non-resident alien who shall come to the Philippines and stay therein for an aggregate period of more than 180 days. C. Resident alien deriving income from a foreign entity. D. Non-resident alien not engaged in trade or business in the Philippines whose country allows personal exemption to Filipinos who are not residing but are deriving income from the said country.
28. Tax imposed on inter-corporate dividends received by a domestic corporation from a resident foreign corporation is: A. Tax exempt. B. Subject to 10% income tax. C. Subject to 15% final tax. D. Subject to 30% corporate tax. 29. Which of the following statements is correct as regards a resident citizen? A. Income from illegal activities is subject to final tax. B. Income tax refunds constitute taxable income to the taxpayer. C. Recovery of bad debts previously written off is part of taxable income. D. As a rule, contest awards and prizes are subject to 20% final tax if they amount to more than P10,000 , otherwise they will be part of taxable income. 30. Which of the following statements is not correct? A. Minimum wage earners shall be exempt from the payment of income tax. B. Holiday pay, overtime pay, night shift differential and hazard pay shall be exempt from income tax. C. Prizes and awards granted to athletes in local and international sports competitions and tournaments whether held in the Philippines or abroad, and sanctioned by their national sports associations are exclusions from gross income. D. Benefits received from or enjoyed under the social security system are exclusions from gross income. 31. Income tax payments to a foreign country, in the case of a resident citizen may be claimed as A. Tax credit and deduction from gross income. B. Tax credit. C. Tax credit or deduction from gross income.
D. Deduction from gross income. 32. Which of the following is taxable? A. P 100,000 interest on long-term deposit or investment B. P 200,000 gain on sale of 10-year bonds C. P 12,000 prize in supermarket raffle D. P 1M winning in Philippine Lotto 33. Which of the following statements is true? A. Payments which constitute bribes, kickbacks and others of similar nature which are necessary to realize profits are allowed as deductions from gross income. B. The taxes which are deductible from gross income include the taxes, interest and penalties incident to tax delinquency. C. Deductions are amounts allowed by the Tax Code to be deducted from gross income to arrive at the income tax liability of a taxpayer. D. Losses from wagering transactions shall be allowed only up the extent of the gains from such transactions. 34. This is not deductible from gross income A. Transportation expenses from the main office to the branch. B. Transportation expenses from home to the office and from the office back to home. C. Travel expenses on business trips. D. Travel expenses while away from home in the pursuit of trade, business or profession. 35. The phrase “related taxpayers” will apply to the following, except: A. Between members of a family. B. Between the grantor and a fiduciary. C. Between a fiduciary of a trust and a beneficiary of such trust.
Between an individual and a corporation more than 50% in value of the outstanding stock of which is owned, directly or indirectly by or for such individual, in case of distributions in liquidation. The optional standard deduction for corporation is A. 10% of the gross income B. 10% of the gross sales/receipts C. 40% of the gross income D. 40% of the gross sales/receipts The optional standard deduction for individuals is A. 10% of the gross income B. 10% of the gross sales receipts C. 40% of the gross income D. 40% of the gross sales/receipts Interest expense incurred to acquire property used in trade or business or exercise of a profession is: A. Not allowed as a deduction against gross income . B. Required to be treated as a capital expenditure to form part of the cost of the asset. C. Allowed as a deduction or treated as a capital expenditure as the option of the taxpayer. D. Allowed as a deduction or treated as a capital expenditure at the option of the government. For individuals with gross compensation income, the following maybe deducted, except: A. Personal exemptions. B. Additional exemptions. C. Optional standard deduction. D. Premium payments on health and/or hospitalization insurance. For mines other than oil and gas wells, a net operating loss without the benefit of incentives under Executive Order 226, as amended, otherwise known as Omnibus Investment Code of 1987, maybe carried over as a deduction from taxable income, if incurred in any of the: A. First 10 years of operation. B. First 4 years of operation. C. First 3 years of operation. D. First 5 years of operation. Using the preceding number, such net operating loss can be carried as a deduction from taxable income, within how many years immediately following the year of such loss? A. 5 years B. 3 years C. 10 years D. 4 years Which of the following statements is not correct? A. In the case of married individuals, where only one of the spouses is deriving income, only such spouse shall be allowed the personal exemption. B. In the case of married individuals, the addition exemptions may be claimed by only one of the spouses. C. As a rule, the husband shall be deemed to be the head of the family and proper claimant of the additional exemption. D. In the case of legally separated spouses, additional exemption may be claimed by the spouses who has custody of the children but shall not exceed four for each spouse. Which of the following statements is not correct? A. If only one spouse is deriving taxable income, only said spouse may claim the ad ditional exemption. B. If both spouses earn taxable income only one of the spouses can claim additional exemption. C. If legally separated from the spouse, the husband can claim the additional exemption unless he waives the right in favor of his wife.
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An unmarried individual with a child out of the wedlock can claim a personal exemption as a head of the family plus additional exemption. With regard to deduction for premiums on hospitalization and health insurance, which of the following statements is wrong? A. Allowed as deduction even if income is from compensation only. B. Allowed as deduction even if income is from business or practice of profession. C. Allowed as deduction even if mixed income. D. Allowed as deduction only if the taxpayer is taking itemized deductions from gross income. Which of the following dependents will qualify a single taxpayer as head of the family? A. Taxpayer’s brother, 22 years old, unemployed, unmarried, living with him and dependent upon him for support. B. Taxpayer’s sister, 18 years of age, unemployed, unmarried, living with their parents, but dependent upon him for chief support. C. Taxpayer’s illegitimate son, 12 years old, unemployed, single, living with him and dependent upon him for support. D. Taxpayer’s godchild, 10 years old and dependent upon him for chief support. For income taxation purposes, the term “corporation” excludes one of the following: A. Ordinary partnership B. An incorporated business organization C. General professional partnership D. Business partnership The taxpayer is allowed to claim additional exemptions for the following, except: A. Legitimate daughter who got married on December 31 of the taxable year, one day before she turned 22. B. Illegitimate son, minor who died December 31 of the previous year. C. Legally adopted daughter, 25 year old but incapable of self-support due to mental defect. D. Recognized natural son who celebrated his 21 st birthday on January 1 of the taxable year. Which of the following is not a condition imposed by the Constitution for the exercise of the power of eminent domain? A. The consent of the owner of the private property to sell the same to the government. B. The payment of just compensation. C. The observance of due process in taking of the private property. D. The existence of public use for the taking of a private property. Which statement is wrong? A. The power of taxation maybe exercised by the government, its political subdivisions, and public utilities. B. Generally, there is no limit on the amount of tax that may be imposed. C. The money contributed as tax becomes part of the public fund. D. The power to tax is subject to certain constitutional limitations. Income from dealings in property (real, personal, and mixed) is the gain or loss derived: A. Only from the cash sales of property. B. From cash and gratuitous receipts of property.
C. D.
From sale and lease of property. Only from the sale of property.
TRUE OR FALSE: For items 51 through 60:
Shade A if statement 1 is true and statement 2 is false. Shade B if statement 1 is false and statement 2 is true. Shade C if both statements are true. Shade D if both statements are false.
51. I. an expense which is necessary but not ordinary, or ordinary but not necessary is deductible from gross income. F II. The taxpayer must signify his intention to elect the itemized deduction, otherwise he is deemed to have chosen the optional standard deduction. F 52. I. The cost of leasehold improvements shall be deductible by the lessee by spreading the cost of the improvements over the life of the improvements or the remaining lease term of the lease whichever period is shorter. T II. Contributions by the employer to a pension trust for past service cost is deductible in full in the year that the employer made the contributions. F 53. I. The term “chief support” means more than one -half of the requirements for support. T II. If two single individuals contribute equal amounts for the support of a dependent, neither one of them may qualify as head of the family. T 54. I. In case of married individuals, the basic and additional exemptions shall be claimed by only one of the spouses. F II. If the dependent child marries during the taxable year, the taxpayer may still claim the same exemption as if the marriage occurred at the close of such year. T 55. I. A gain from sale of shares of a domestic corporation shall be considered derived from the Philippines regardless of where the shares were sold. T II. A gain from sale of shares of a foreign corporation shall be considered derived from the country where the corporation was created or organized. F 56. I. Interest paid on preferred stock is deductible from the gross income of the paying corporation. F II. A capital expenditure usually benefits more than one accounting period and is deductible from the gross income in the year it is paid or incurred. F 57. I. In case of a married taxpayer, only the spouse claiming the additional exemptions for dependents shall be entitled to the deduction on premium payments on health and/or hospitalization insurance. T II. The deduction for premium payments on health and/or hospitalization insurance shall not exceed P2,400 per year for the family or P200 per month. T 58. I. If the taxpayer should have additional dependent children during the taxable year, he can always claim the additional exemptions for such year. F II. A non-resident alien is taxable on all income derived from sources within the Philippines. T 59. I. Housing privileges of the Armed Forces of the Philippines are taxable fringe benefits. F II. Cost of premiums borne by the employer for the group insurance of his employees is a taxable fringe benefit. F 60. I. Fringe benefits may be given to managerial, supervisory and rank and file employees. T
II. Cost of economy and business class airplane ticket for foreign travel is a taxable fringe benefit. F SITUATIONAL ANALYSIS:
61. After 10 years of romantic relationship, Gardo decided to end his relationship with Tecla which made the latter very angry. Tecla with anger in her eyes, boxed, kicked and berated Gardo. Gardo tried to pacify Tecla, but Tecla slipped, lost control and fell to the ground requiring hospitalization. To buy peace, Gardo decided to shoulder medical expenses for the injuries suffered by Tecla. The amount is: A. Taxable income of Tecla. B. Deductible expense of Gardo. C. Subject to final tax. D. Exempt from income tax. 62. At the testimonial dinner for new CPA’s, Ador , a reviewer was requested to sing the theme song of the movie “Ghost”. Bruno , a new CPA, was so delighted that he felt he was falling in love with Ador so he decided to cancel Ador’s indebtedness to him. As a result: A. Ador realized a taxable income as compensation for services. B. If Ador accepts the cancellation, he will pay donor’s tax. C. Ador received a gift from Bruno and therefore is not part of his taxable income. D. The amount of indebtedness cancelled is partly taxable, partly exempt. 63. Zoe took out a life insurance policy of P1,000,000 naming his wife as beneficiary. The policy provides that the insurance company will pay Zoe and his beneficiary the amount of P1,000,000 after the 25 th year of the policy, should he die before this date. The premiums paid on the policy are P700,000. If Zoe outlived the policy and received the proceeds of P1,000,000, such proceeds will be: A. Taxable in full. B. Partly taxable, partly exempt. C. Subject to final tax. D. Exempt from income tax. 64. Using the preceding number, if Zoe dies and his beneficiary received the proceeds of P1,000,000, such proceeds will be: A. Taxable in full. B. Partly taxable, partly exempt. C. Subject to final tax. D. Exempt from income tax. 65. Zara, a dedicated and honest employee of Majubis Corp. for the past 20 years was advised that she is to be retrenched as the company was losing heavily but that she would be given the separation pay provided by law. To avoid implication of inefficiency, Zara was advised to file a letter of resignation instead of being retrenched. If Zara files a letter of resignation and receives the separation pay, such amount is: A. Taxable in full. B. Partly taxable, partly exempt. C. Exempt from income tax. D. Subject to final tax. 66. Using the preceding number, if Zara is retrenched and receives the separation pay, such amount is: A. Taxable in full. B. Partly taxable, partly exempt. C. Exempt from income tax. D. Subject to final tax. 67. A building was partially destroyed by fire in 2009. The building had a book value of P5,000,000. The insurance company was willing to pay P4,000,000, which was
68.
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refused by the owner. Finally, the claim was settled in 2011 for P4,600,000. The proceeds will be: A. Exempt from income tax. B. Part of taxable income. C. Subject to final tax. D. Partly exempt, partly taxable. Eme Corporation secured an income tax holiday for 5 years as a pioneer industry. On the fourth year of the tax holiday, Eme Corporation declared and paid cash dividends to its stockholders, all of whom are individuals. Are the dividends taxable? A. The dividends are taxable: the tax exemption of Eme Corporation does not extend to its stockholders. B. The dividends are tax-exempt because of Eme Corporation’s income tax holiday. C. The dividends are taxable if they exceed 50% of Eme Corporation’s retained earnings. D. The dividends are exempt if paid before the end of Eme Corporation’s fiscal year. Witchikels Corporation purchased a residential house and lot with a swimming pool in an upscale subdivision and required the company president to stay there without paying rent; it reasoned out that the company president must maintain a certain image and be able to entertain guests at the house to promote the company’s business. The company president declared that because they are childless, he and his wife could very well live in a smaller house. Was there a taxable fringe benefit? A. There is no taxable fringe benefit because the company president was only required to stay there and did not demand free housing. B. There was no taxable fringe benefit since it was for the convenience of the employer and was necessary for its business. C. There was a taxable fringe benefit because the house was very luxurious. D. There was a taxable fringe benefit since the stay at the house was for free. Bank A deposited money to Bank B which earns interest that is subjected to the 20% final withholding tax. At the same time, Bank A is subjected to the 5% gross receipts tax on its interest income on loan transactions. Which statement below incorrectly describes the transactions? A. There is no double taxation because the first is income tax while the second is business tax. B. There is double taxation because two taxes – income tax and gross receipts tax are imposed on the interest incomes described above, and double taxation is prohibited under the 1987 Constitution. C. Income tax on interest income of deposits of Bank A is a direct tax while GRT on interest income on loan transaction is an indirect tax. D. There is no double taxation because the income tax is on the interest income on Bank A on its deposits with Bank B (passive income) while the gross receipts tax is on the interest income received by Bank A from loans to its debtor – customers (active income). An individual, who is a real estate dealer, sold a residential lot in Quezon City at a gain of P100,000 (selling price of P900,000 and cost of P800,000). The sale is subject to income tax as follows: A. 6% capital gains tax on the gain. B. 6% capital gains tax on the gross selling price or fair market value, whichever is higher. C. Ordinary income tax at the graduated rates or 5% to 32% of net taxable income. D. 30% income tax on net taxable income. The Cancer Hospital of the Philippines is a charitable institution. Mr. Walang-awa visited the hospital on his 60th birthday. He donated P500,000 to the hospital and P10,000 to a cancer victim who is only ten (10) years old. He also brought with him a chain restaurant mascot that
played with the children patients while eating the popular product of the restaurant. It had cost him P15,000. Which of the above contributions is qualified as deductions from the gross compensation income of Walang-awa if he is a newly retired government official who is not engaged in business? A. Only the P500,000 B. The P500,000 and the P10,000 C. The P500,000, P10,000, and the P15,000 D. None of them 73. Using the same data above, which of the following contributions is/are qualified as deduction to Walangawa if he is engaged in business? A. Only the P500,000 B. The P500,000 and the P10,000 C. The P500,000, P10,000, and the P15,000 D. None of them 74. The President of the Philippines and the Prime Minister of Japan entered into an executive agreement in respect of a loan facility to the Philippines from Japan whereby it was stipulated that interest on loans granted by private Japanese financial institutions in the Philippines shall not be subject to Philippines income taxes. What basic characteristic of taxation has been violated by this agreement? A. Inherent limitation B. Theoretical justice C. Legislative in character D. Administrative feasibility 75. After having been informed that some massage parlors are being used as fronts for prostitution, the Sangguniang Panlungsod of Manila passed a tax ordinance subjecting massage parlors within its jurisdiction to such onerous taxes that leave them no other alternative but to stop operating. The passage of the ordinance is a valid exercise of: A. Taxation. B. Eminent Domain. C. Police Power. D. Police Power and Power of Taxation. PROBLEM SOLVING: 76-78. The following data belong to Zion Corp. for the year 2015: Educational assistance to supervisors and their P100,000 children 80,000 Employer’s contribution for the benefit of the employees to retirement, insurance, and hospitalization benefit plan 120,000 Year’s rental for an apartment paid by the corporation for the use of its comptroller
The fringe benefits tax due is: A. P75,294 C. P141,176
B. D.
P103,529 P112,941
79-81. Zady Corp., a regional operating headquarters of a multinational company in the Philippines provided its employees with cash and non-cash fringe benefits in 2015 as follows: Total amount of fringe benefits P1,000,000 60% of said amount was given to rank and file employees 40% of said amount was given to corporate officers as follows: 45% To resident citizens (taxed at regular rates) 35% To non-resident aliens not engaged in trade or business in the Philippines 20% To special alien and Filipino employees
The fringe benefits tax due is: A. P60,704 C. P84,706
B. D.
P145,491 P188,235
For items 82 through 87:
The following relate to the compensation income of a private rank and file employee during 2016: Annual compensation income P540,000 th 13 month pay 45,000 th 14 month pay 45,000 Total of monthly rice allowances during the 20,000 year Commission from the employer 12,000 Christmas gift 8,000 82-84. Compute the total non-taxable compensation income including exempt de minimis benefits. A. P0 B. P23,000 C. P53,000 D. P105,000
88-90. The following relate to the net income of the audit firm of Mr. Zeus, a single taxpayer with two dependent children: Professional Fees P500,000 Long-term capital gain 80,000 Short-term capital gain 45,000 Ordinary gain 20,000 Long-term capital loss ( 90,000) Short-term capital loss ( 30,000) Ordinary loss ( 40,000) Other business expenses ( 200,000) Net income P285,000
B. D.
P210,000 P235,000
91-93. Shown below is the summarized result of operations of Ms. Zia’s business: Sales P700,000 Cost of Sales 300,000 Gross profit P400,000 Capital gain on the sale of land 100,000 Total gross income P500,000 Other deductible expenses 100,000 Contributions expenses: 50,000 Government priority project
Non-accredited, institution Foreign foundation Net income
45,000
non-profit
Compute his taxable income. A. P230,000 C. P255,000
25,000 P280,000
B. D.
P270,000 P170,000
For items 94 through 102:
The following relates to a taxpayer: Sales Less: Cost of Sales Gross income from operations Add: Non-operating income Dividend income – domestic Interest income – bank Gain on sale of domestic stocks Gain on sale of office equipment Total gross income Less: Expenses
P1,000,000 450,000 P 550,000
P
40,000 150,000 50,000 80,000 50,000 15,000 10,000 12,000 40,000 P 447,000 P 223,000
Half of the contribution to pension is funding of prior service cost. There was a write-off of receivables totaling P12,000 during the year. The contribution was made to an accredited civic organization. 94-96. What is the total regular allowable itemized deductions? A. P369,900 B. P371,100 C. P317,910 D. P354,600
85-87. Compute the gross taxable compensation income. A. P670,000 B. P565,000 C. P617,000 D. P647,000
Compute his taxable income. A. P290,000 C. P190,000
Interest expense Salaries expense Depreciation expense Contribution expense Pension contribution Provision for bad debts Entertainment expense Office supplies Loss on sale of patent Total Net income
50,000 20,000 30,000 20,000 670,000
97-99. Compute the taxable income before OSD assuming the taxpayer is a corporation using OSD. A. P620,000 B. P520,000 C. P550,000 D. P570,000 100-102. Compute the total deductions assuming the taxpayer is a corporation using OSD. A. P220,000 B. P228,000 C. P248,000 D. P208,000 For items 103 through 114:
Mr. Pedro is a managerial employee at Lafang International. He is paid the following benefits during the year: Salaries, net of P8,000 PhilHealth, P12,000 SSS, P970,000 and P4,000 HDMF and P10,000 withholding tax Fixed allowance 40,000 th 13 month pay and other benefits 98,000 Fringe benefits (residential rentals) 102,000 Mr. Pedro has a senior citizen mother and a disable godson who are dependent upon him for chief support. 103-105. Compute the taxable compensation income. A. P1,036,000 B. P936,000 C. P961,000 D. P986,000 106-108. Compute the fringe benefit tax. A. P0 B. C. P48,000 D.
P72,000 P24,000
109-111. Assuming Lafang International is a regional operating headquarters of a multinational corporation; compute Mr. Pedro’s income tax on compensation. A. P155,400 B. P259,000 C. P117,000 D. Indeterminable 112-114. Using the same facts in the immediately preceding numbers, compute the fringe benefits tax. A. P17,000 B. P9,000 C. P34,000 D. P18,000 For items 115 through 120:
The Finale Corporation had the following historical MCIT and RCIT data: Year MCIT RCIT 2013 P120,000 P110,000 2014 200,000 220,000 2015 190,000 0
2016
170,000
180,000
115-117. Basing solely on the information provided, what is the tax due and payable in 2013 and 2014, respectively? A. P120,000; P220,000 B. P120,000; P100,000 C. P120,000; P210,000 D. P110,000; P220,000 118-120. In the immediately preceding problem, what is the tax due and payable in 2015 and 2016, respectively? A. P190,000; P0 B. P190,000; P180,000 C. P0; P0 D. P170,000; P0 END OF EXAMINATION “EVERY WEAKNESS YOU HAVE IS AN OPPORTUNITY FOR GOD TO
SHOW TO SHOW HIS STRENGTH IN YOUR LIFE.” Prepared by: FRANCESCO RAFIEL A. MALLARI, CPA FACULTY, Department of Accountancy OLFU – Pampanga Reviewed and Checked by: ALEND KERSEY Q. SAMPANG, CPA OIC – Department of Accountancy OLFU – Pampanga Approved by: Dr. IGNACIO C. CORDOVA, Jr. Dean – College of Business and Accountancy OLFU
