Nfjpia Nmbe Taxation 2017 Ans (1)

NATIONAL MOCK BOARD EXAMINATION 2017 TAXATION 1.

A non-VAT person decided to optionally register his VAT-subject transactions under the VAT system. He became VATregistered during the year. He was also engaged in the sale of agricultural and marine food products in their original state. He wanted to, likewise, register, under the VAT system, his VAT-exempt sales. He approached you to seek advice as to what business tax will he be liable to. What will be your answer? a. He is liable to VAT on his VAT-subject transactions including the sale of agricultural and marine food products in their original state. b. He is liable to VAT on his VAT-subject transactions but exempt from VAT on the sale of agricultural and marine food products in their original state. c. He is not liable to VAT on his VAT-subject transactions and the sale of agricultural and marine food products in their original state. d. He is not liable to any business tax because he is not qualified to optionally register under the VAT system.

2.

An individual who is a pure compensation income earner is allowed to deduct the following from his gross compensation income except: a. Basic personal exemption. b. Additional exemption. c. Premium payment on health and/or hospitalization insurance. d. Personal expenses.

3.

An individual who avails of optional standard deduction cannot deduct the following except: a. cost of sales. b. business expenses. c. premium on health and/or hospitalization insurance. d. basic personal exemptions and additional exemption.

4.

The personal exemption allowed to estate and trust is: a. P20,000 c. P50,000 b. P25,000 d. none. Not allowed personal exemption. Use the following items for the next 4 items A VAT-registered practitioner, single and resident citizen, has five (5) dependents living with and dependent upon him for chief support. Two (2) of the dependents are minors who are legally adopted. One is a child out of wedlock, person with disability, 25 years old. The other two (2) are his brothers, who are both minors. During the first quarter of the current, he earns and spends the following (net of applicable taxes): Gross receipts from practice of profession, net of 10% withholding tax P1,710,000 Cost of services(40% VAT-subject) 500,000 Salary from part-time teaching job, net of 5% withholding tax 123,500 Expenses in connection with the practice of profession (80% VAT- subject) 100,000 VAT payments for January and February 100,000

5.

How much is the personal exemptions for the quarter? a. P150,000 b. P125,000

c. P75,000 d. None of the choices

6.

How much is the taxable net income using itemized deductions? a. P1,300,000 c. P1,140,000 b. P1,175,000 d. None of the choices

7.

How much is the taxable net income using OSD? a. P1,300,000 b. P1,175,000

8.

c. P1,140,000 d. None of choices

One of the following is not an important factor when computing the taxable net gifts and the gift tax payable. a. Residence of the donor b. Citizenship of the donor c. Blood relationship between the donor and the donee d. The economic status of the donee 1|P

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9.

John transfers his car to his brother Samuel for P400,000. The sold car costs P500,000. At the time of the transfer, the car has a fair market value of P300,000. John inquires from you whether or not he is required to file donor’s tax return and pay donor’s tax. What will you tell him? a. He has to file a donor’s tax return because the transfer will be considered a transfer for insufficient consideration because the selling price is less than the cost. b. He does not have to file a return because it is a transfer for sufficient consideration, hence, no donor’s tax is due. c. He has to file a donor’s tax return and pay donor’s tax because transfers to relatives are generally subject to donor’ tax. d. He does not have to file a return because the BIR will not be in a position to know the transfer as it is done between brothers.

10.

A stockholder of a closely held corporation owns 100,000 shares before the IPO. The par value of the share is P1,000,000. During the IPO, the shares are selling at P12 per share. His broker-friend advises him not to sell his shares during the IPO but instead wait until after the IPO. After the IPO, the outstanding shares of the closely held corporation are 1,000,000 shares and are now selling at P14 per share at the local stock exchange. The stockholder of the closely held corporation approaches you to seek your advice because he is also planning to sell the shares directly to his friend and, therefore, not traded through the local stock exchange at P15 per share. How much is the capital gains tax if he sells the shares directly to his friend? a. P50,750 c. P15,000 b. P45,000 d. None of the choices

11.

Ching Ah Chung, accomplished singer from Hongkong, is included in one of the local films produced by Bebecu Productions. Ching Ah Chung stays in the Philippines for five (5) months and makes the Philippines his temporary home as required in the contract. How will you classify Ching Ah Chung for Philippine income tax purposes? a. Resident citizen b. Resident alien c. Non-resident alien engaged in trade or business d. Non-resident alien not engaged in trade or business

12.

Nash Singha, non-resident Indian national doing business in the Philippines, seeks your advice whether or not he is allowed to claim personal exemptions for Philippine income tax purposes. What will your answer be? a. He is not allowed to claim personal exemptions for Philippine income tax purposes because he is not a resident. b. He is allowed to claim personal exemptions for Philippine income tax purposes because being a non-resident alien doing business in the Philippines entitles him to such exemptions at all times. c. He is allowed to claim personal exemptions for Philippine income tax purposes if the country where he is a citizen or resident allows personal exemptions to citizens of the Philippines not residing therein. d. He is not allowed to claim personal exemptions for Philippine income tax purposes because there is no showing that he intends to reside in the Philippines permanently.

13.

Mrs. N.A. Iwanan is an employee of a Philippine corporation. Her husband is working as an OFW for years and has no income from Philippine sources. During the filing of her Philippine income tax return, she asks you whether she can claim the additional exemptions or not. What will your answer be? a. She cannot claim the additional exemption because the husband shall be the proper claimant of the additional exemption for qualified dependent children unless he explicitly waives his right in favor of his wife. b. She can claim the additional exemption provided her husband explicitly waives his right in her favor. c. She can claim the additional exemption even without a waiver of her husband’s right because where the spouse of the employee is unemployed or is a non-resident citizen deriving income from foreign sources, the employed spouse within the Philippines shall be automatically entitled to claim the additional exemption for children. d. She can claim the additional exemption if the BIR rules in her favor.

14.

A single individual taxpayer, resident citizen, has the following dependents during the year: Andres, senior citizen, not a relative Ben, person with disability, child, 22 years old Carmen, 21 years old, resides abroad because of sickness David, child with his live-in partner, 18 years old How much total additional exemptions can this taxpayer claim? a. P100,000 c. P50,000 b. P 75,000 d. P25,000

15.

A taxpayer is supporting three (3) persons with disability. The first one is a nephew who is 19 years old; the second one is a child out of wedlock, 18 years old and the third one is a child who is 25 years old. He asked you how much additional exemption he can claim. What will your answer be? 2|P

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a. b.

P75,000 P50,000

c. P25,000 d. None

16.

Nicolas placed a property under trust in favor of his son, Nicolas II. He designated Julian as a trustee. Under the term of the trust, Julian has full discretion on what to do with the income of the property under the trust. Who is the taxpayer for income tax purposes? a. Nicolas c. Julian b. Nicolas II d. Trust

17.

Mr. Jose Vicente is a sole proprietor engaged in trading business. He consults you as to what income tax returns he will file. What will your answer be? a. He is required to file quarterly income tax returns only because he is engaged in business. b. He is not required to file quarterly income tax returns because individuals are required to file annual returns only. c. He is required to file quarterly returns and annual returns because he is engaged in business. d. He is not required to file any income tax return because he is a sole proprietor, hence, exempted from filing returns.

18.

Mr. Faustino Santos, testator, appointed Mr. Generoso Cruz as the executor of the estate. Mr. Santos was a citizen of Argentina and a resident ofQuezon City. He was in California, USA visiting his son when he died. He owned a Mercedes sports car and had several bank deposits in the USA. The executor asked you whether or not the car and the bank deposits in the USA will still have to be declared as part of the Philippine gross estate of Faustino Santos. Argentina does not impose transfer taxes of any kind. What answer will you give him? a. The car and the bank deposits in the USA have to be declared as part of the Philippine gross estate because the decedent was a resident at the time of his death and, as such, properties wherever situated are included in the gross estate. b. The car and the bank deposits in the USA need not be declared as part of the Philippine gross estate because when Mr. Santos died he was in California, USA making him a non-resident alien. c. The car and the bank deposits in the USA have to be declared as part of the Philippine gross estate only when the decedent specified in his will and testament that such properties must form part of his gross estate. d. The car and the bank deposits in the USA need not be declared as part of the Philippine gross estate because Argentina does not impose transfer tax of any kind.

19.

A client asked you whether or not to add the gifts made in the previous months to the gifts made in the current month of the same calendar year. What would your answer be? a. The gifts made in the previous months should not be added to the gifts made in the current month because the computation of the taxable net gifts is on a per gift basis over a period of one calendar year. b. The gifts made in the previous month should be added to the gifts made in the current month because the computation of the taxable net gifts is cumulative basis over a period of one calendar quarter. c. The gifts made in the previous months should not be added to the gifts made in the current month because the BIR would have no way of knowing them anyway. d. The gifts made in the previous months should be added to the gifts made in the current month so that the progressive effect of donor’s tax will be felt.

20.

A VAT-registered taxpayer treated the excess of output VAT over input VAT as expense and was shown in the Statement of Income and Expenses. Is it the proper treatment of VAT? a. Yes. VAT is treated as expense and is properly shown in the Statement of Income and Expenses. b. No. VAT payable is considered as current liability and must be shown in the Statement of Financial Condition. c. Yes. But the taxpayer has the option to show it in the Statement of Financial Conditional if it is favorable to him. d. No. There is no clear rule on how to treat VAT payable.

21.

A resident citizen makes overseas calls to his parents who live in the United Sates of America. There are times when it is his parent’s turn to call him from the USA. The calls are personal in nature and are paid for by his parents in USA. He asked you whether or not he is subject to the 10% overseas communications tax. What will you tell him? a. He is subject to the 10% overseas communications tax on his calls to his parents. b. He is subject to the 10% overseas communications tax on his calls to his parents and the calls of his parents origination from USA. c. He is not subject to the 10% overseas communications tax because the calls are personal in nature. d. He is not subject to the 10% overseas communications tax because the calls are paid for by his parents who are in USA. The following elements must be present in order for retirement benefits to be exempt from withholding tax. Which is/are incorrect? I. A reasonable private benefit plan is maintained by the employer; II. The retiring official or employee has been in the service of the same employer for at least 5 years; III. The retiring official or employee is not less than 60 years of age at the time of his retirement;

22.

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IV. a. b. c. d. e.

The benefit had been availed of only once. I, II, III and IV I and II only II and III only III and IV only I and IV only

23.

Which of the following shall be subject to garnishment and not distraint? a. Stocks and other securities b. Debts and credits c. Bank account d. None of the above

24.

Which of the following dependents does not qualify a taxpayer for an additional exemption? a. Recognized natural son who celebrated his 21st birthday during the taxable year b. Son who is 25 years old, unmarried, but incapable of self-support due to mental defect c. Minor son who got employment in the previous taxable year d. Minor son who died in December 31 of the taxable year

25.

Kid Kulapu is a boxer sanctioned by the Amateur Boxing Association of the Philippines (ABAP) and was sent to Macau to compete in the 2014 World Boxing Championships. He won the gold medal after defeating the opponent from Cuba, Black Lloyd. Upon his return from the competition, he was awarded PhP 5,000,000 by Vino Kulafu, Inc. for his achievement. What is the tax consequence of the award received by Kid? a. Subject to income tax since the amount is substantial and will be considered addition to the existing wealth of Manny b. Not subject to income tax since it will fall under exclusions from gross income c. Subject to final withholding tax on the part of Calla since this is considered income payment to Manny. d. Not subject to income tax since Manny brought prestige to the country by becoming a world champion

26.

Which of the following statements is incorrect? a. When compensation is received in money, the measure of the income is the amount of money received b. When compensation is received other than in money, the fair market value of the thing taken in payment is the measure of income. c. If services were rendered at a stipulated price, in the absence of the proof to the contrary, such price will be presumed to be the fair market value of the compensation received. d. The fair discounted value of a non interest bearing note issued as security for payments shall be treated as income as of the time of receipt.

27.

Corporation X sold some of its shares of stock from which it realized profit therefrom. A portion of this profit was given as bonuses or allowances to the corporate officers as authorized by its laws. I. The bonuses and allowance are deductible from gross income as ordinary and necessary expenses. II.

The bonuses and allowances are disguised as dividends which are not allowed to be deductible from gross income. a. b. c. d.

Only I is correct. Only II is correct. Both I and II are correct. Neither I nor II is correct.

28.

Which of the following is not taxable in the Philippines? a. Personal property produced within, sold without b. Personal property produced without, sold within c. Personal property purchased within, sold without d. Personal property purchased without, sold within

29.

Which of the following is/are not a test in determining whether income is earned for income tax purposes? a. Realization principle b. Claim of right doctrine c. Economic benefit theory d. Severance test theory e. None of the choices 4|P

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30.

Which of the following income tax implications on capital gains presumed to have been realized from the sale, exchange or disposition of lands and/or buildings located in the Philippines, which are classified as capital assets is/are true? a. b. c. d. e.

31.

Which of the following statement/s is/are true? I. If the general professional partnership (GPP) availed of the itemized deduction in computing its net income, the partners cannot claim itemized deductions from said share. II. If the GPP availed of itemized deductions, the partners are not allowed to claim the optional standard deduction (OSD) from their share in the net income. III. If the GPP avails of OSD in computing its net income, the partners comprising it can no longer claim further deduction from their share in the said net income. a. b. c. d.

32.

I, II and III I and II only I and III only II and III only

Which of the following is/are not taxable for income tax purposes? I. Recovery of damages (compensation for injury; from tortuous acts) II. Recovery of damages pertaining to recovery or return of loss income or profit III. Recovery of items previously deducted from gross income (tax benefit rule) IV. Forgiveness of indebtedness (if effect of entire transaction is a reduction of purchase price of property acquired in prior year) a. b. c. d.

33.

If sold by a domestic corporation, shall be subject to the capital gains tax of 6% based on the gross selling price or current fair market value whichever is higher of such land and/or building If sold by a resident foreign corporation, shall be subject to the ordinary income tax If sold by a non-resident foreign corporation, shall be subject to the 30% final withholding tax (FWT) If sold by a non-resident alien not engaged in trade or business (NANETB), shall be subject to the capital gains tax of 6% based on the gross selling price or current fair market value whichever is higher of such land and/or building All of the choices

I, II, III and IV II and III only III and IV only I and IV only

Which of the following is/are not required to file an income tax return? I. A citizen of the Philippines engaged in business or practice of profession whose gross income does not exceed his total personal and additional exemptions for dependents. II. An individual whose sole income has been subjected to final withholding tax. III. A minimum wage earner or an individual who is exempt from income tax pursuant to the provisions of the Tax Code, as amended, and other laws, general or special. IV. An individual deriving compensation concurrently from two or more employers at any time during the taxable year a. I, II, III and IV b. II and III only c. III and IV only d. I and IV only

34.

The Commissioner may compromise the payment of any internal revenue tax when: I. A reasonable doubt as to the validity of the claim against the taxpayer exists II. The tax or any portion thereof appears to be unjustly or excessively assessed III. The administration and collection costs involved do not justify the collection of the amount due IV. The financial position of the taxpayer demonstrates a clear inability to pay the assessed tax a. I, II, III and IV b. II and III only c. III and IV only d. I and IV only

35.

True or False I. A charitable institution which derives income from paying patients, whether out-patient, or confined in the hospital is subject to income tax. 5|P

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II. Income of pension trust is exempt from income tax.

A. I true; II false B. I false; II true C. Both are true D. Both are false

36.

XYZ Corporation, a domestic corporation, has the following data in 2016: Gross sales (net of withholding tax of 1%)

4,950,000.00

Business expenses

2,250,000.00

Gain on sale of business assets

70,000.00

Interest on FCDU deposit with BDO, net tax

18,500.00

Sale of shares of stocks, not listed and traded Selling Price

250,000.00

Cost

165,000.00

Dividends from MNO Corporation, domestic Dividends paid during the year Reserved for building acquisition

95,000.00 90,000.00 300,000.00

In 2015, the Corporation suffered an operating loss of P 230,000. This amount was carried forward and claimed as deduction from gross income in 2016. How much is the improperly accumulated earnings tax? a. b. c. d. 37.

Which of the following is/are taxable housing fringe benefit?

I. II. III.

Housing privilege of the Armed Forces of the Philippines (AFP) A housing unit, which is situated inside or located with 60 meters away from the perimeter of the business premises Temporary housing for an employee who stays in a housing unit for three months or more

a. b. c. d. 38.

I, II and III I and II only I and III only II and III only

In “Operation Kandado,” the BIR temporarily closed business establishments, including Cheng Corporation that failed to comply with VAT regulations. Cheng Corporation contends that it should not be temporarily closed since it has a valid and existing VAT registration, it faithfully issued VAT receipts, and filed the proper VAT returns. The contention may be rejected if the BIR investigation reveals that a. b. c. d.

39.

161,725 183,900 184,300 184,725

the taxpayer has not been regularly filing its income tax returns for the past 4 years. the taxpayer deliberately filed a false and fraudulent return with deliberate intention to evade taxes the taxpayer used falsified documents to support its application for refund of taxes. there was an understatement of taxable sales or receipts by 30% or more for the taxable year.

Jay Corporation is registered under the laws of the Virgin Islands. It has extensive operations in Southeast Asia. In the Philippines, its products are imported and sold at a mark-up by its exclusive distributor, Roxy’s Trading, Inc. The BIR compiled a record of all the imports of Roxy from Jay and imposed a tax on Jay’s net income derived from its exports to Roxy. Is the BIR correct? a. Yes. Jay is a non-resident foreign corporation engaged in trade or business in the Philippines. b. No. The tax should have been computed on the basis of gross revenues and not net income. c. No. Jay is a non-resident foreign corporation not engaged in trade or business in the Philippines. 6|P

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d. 40.

41.

Yes. Jay is doing business in the Philippines through its exclusive distributor Roxy’s Trading, Inc.

ABC Transport Services is a bus company with license to operate from the LTFRB, as such it is subject to – a. 3% Common Carriers Tax. b. 12% Value Added Tax. c. Excise tax. d. 3% International Carriers Tax. The VAT accrues on the sale of services upon the occurrence of the following event – a. Issuance of a statement of account by the supplier to the customer. b. Completion of the service by the supplier to the customer. c. Payment by the customer of the complete price of the service.

d. Payment by the customer for any part of the service. 42.

Romualdez recently bought five units of HD television sets with home theater system from SDK Appliances with a list price of Php 72,500. Romualdez was given a trade discount of 15%, purchase discount is 3/10, n/30. Cost of freight as reflected in the bill of lading of the forwarder is Php 1,648 per television set, FOB shipping point, freight collect. How much shall be the input tax on the purchase of television sets? a. Php 38,839 b. Php 33,013 c. Php 33,896 d. Php 39,722

43.

Donations to which of the following entities shall not be exempt from donor’s tax under special laws? a. Integrated Bar of the Philippines b. Philippine-American Cultural Foundation c. Ramon Magsaysay Award Foundation d. Philippine Life Insurance Corporation

44.

The gross income of an employee amounted to P 310,000, which includes P 15,000 monetized 10-day vacation leave. How much is his taxable gross compensation income? a. P310,000 b. P295,000 c. P305,000 d. P0

45.

Giovanni, whose family is a resident of Aurora Province, has four children. In computing his income tax liability for the taxable year 2013, he made the following representations about his four children: I. II. III. IV.

Glenn, 20, living in Manila for his tertiary education Gwen, 18, married to Tim Gail, 25, mentally challenged Gab, 12, a love child

How much may Giovanni claim as additional exemption in computing his income tax liability? a. P100,000 b. P75,000 c. P50,000 d. P25,000 e. P0 46.

Which of the following is not passive income subject to final tax? a. Winnings from lottery, raffle draws in the Philippines. b. Royalty income from copyrights used in the Philippines. c. Prizes from a sports contest in the Philippines amounting to Php 10,000. d. Cash dividends received by individuals from domestic corporations.

47.

Compania Italliani is a corporation in Italy. During the tax year, it distributed dividends to its stockholders. Filipinas, Inc., a Philippine company which has investments in stocks in Italliani, received said dividends. a. Dividends are not taxable. 7|P

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b. c. d.

48.

Dividends are taxable at 30% or at 15% if the corporation is subject to a tax sparing credit. Dividends are taxable at 30%. Dividends are taxable at 25%.

As a CPA what would you tell if a domestic corporation asked you how many financial statement and tax return copies are filed with the BIR? a. 2 copies b. 3 copies c. 4 copies d. As many as required by the revenue officer

49.

The following shall be considered as "de minimis" benefits not subject to income tax as well as withholding tax on compensation income of both managerial and rank and file employees, except: a. Monetized value of vacation and sick leave credits paid to government officials and employees b. Monetized unused sick leave credits of private employees not exceeding ten (10) days during the year c. Medical cash allowance to dependents of employees, not exceeding P750 per employee per semester or P125 per month; d. Rice subsidy of P1,500 or one (1) sack of 50 kg. rice per month amounting to not more than P1,500;

50.

Which of the following methods of depreciation is not expressly enumerated under the Tax Code? a. Output or production method b. Sum-of-the-years-digit method c. Straight-line method d. Declining-balance method

51.

For how many years is the taxpayer required to maintain hard copies of books of accounts, including subsidiary books and other accounting records? a. 2 years b. 3 years c. 5 years d. 10 years

52.

Effective January 2015, benefits received by an employee by virtue of a Collective Bargaining Agreement (CBA) and productivity incentive schemes combined are tax exempt, provided that it does not exceed P___________ per employee per taxable year. a. P 5,000 b. P 10,000 c. P 30,000 d. P 82,000

53.

What is the DST rate on original issue of shares of stock? a. One peso (P1.00) on each two hundred pesos (P200), or fractional part thereof, of the par value, of such shares of stock b. Seventy-five-centavos (P0.75) on each two hundred pesos (P200), or fractional part thereof, of the par value of such stock c. Fifty-centavos (P0.50) on each two hundred pesos (P200), or fractional part thereof, of the par value, of such shares of stock d. Twenty-five-centavos (P0.25) on each two hundred pesos (P200), or fractional part thereof, of the par value, of such shares of stock

54.

The Bureau of Internal Revenue (BIR) shall be under the control and supervision of the a. Department of Finance b. Court of Tax Appeals c. Supreme Court d. Department of Interior and Local Government

55.

Seven Kingdoms Corporation, a domestic corporation, declared and distributed to its stockholders shares of Red Keep Corporation. One of its stockholders, Theon Greyjoy, received 100 shares of Red Keep Corporation shares as dividends. At the date of dividend declaration, the fair market value of Red Keep Corporation shares was P120 per share and by the time Theon Greyjoy received the dividend, the fair market value per share was P180. The dividend is a. A stock dividend, hence exempt from tax b. A property dividend which will form part of taxable income of Theon Greyjoy c. A property dividend which is subject to final tax based on its fair market value of P180 per share 8|P

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d. A property dividend which is subject to final tax based on its fair market value of P120 per share 56.

Which of the following statements is true? a. The Department of Finance may grant exemption from all forms of taxes b. Interests paid incident to tax delinquency are allowed as deduction from gross income c. Rentals of personal properties are subject to 5% expanded withholding tax d. Fringe benefit tax is computed based on the monetary value of the fringe benefit

57.

Robert Baratheon, a resident citizen, single with 5 qualified dependent illegitimate children had the following during the calendar year 2015: Compensation income 250,000 th 13 month pay 20,000 Christmas bonus 75,000 Employment Expenses 120,000 SSS premium contributions 3,600 PhilHealth contribution 2,400 Pag-ibig contribution 2,000 Union dues 1,000 Premiums on health insurance 4,000 1st Statement: The taxable income after total personal exemption is P104,000. 2nd Statement: The total personal exemption is P50,000. 3rd Statement: The non-taxable 13th month pay and other benefits is P30,000. 4th Statement: The deductible premiums on health insurance is zero since the annual gross income of the family exceeds P250,000. Which of the above statements is/are correct? a. 1st and 2nd statements b. 2nd and 3rd statements c. 3rd and 4th statements d. 4th and 1st statements

58.

Statement 1: Income items subjected to final tax are no longer included in computing the taxable income of the taxpayer. Statement 2: Large taxpayers are not required to file their returns online through the BIR’s electronic filing and payment system (eFPS) facility. Statement 3: Sales to PEZA-registered entities are generally treated as tax-exempt sales. a. True, True, True b. False, True, False c. False, False, True d. True, False, False

59.

Which of the following statements is/are not correct? Statement 1: The income tax returns (ITRs) of taxpayers which have adopted functional currency (other than Philippine peso) in their financial statements and books of accounts shall be prepared using the adopted functional currency. Statement 2: For purposes of translating the functional currency income and expenses to Philippine Pesos, the translation shall be done on a quarterly basis using the average exchange rate during the quarter (under the Philippine Dealing System or PDS). Statement 3: All tax returns other than the ITR shall be filed in Philippine peso currency using historical peso amount or actual conversion/prevailing PDS rate on transaction day, whichever is applicable. Statement 4: Tax credits applied against the income tax due (in Philippine pesos), if any, shall be equal to the actual amounts of such credits in Philippine pesos, as shown in the supporting documents (e.g. withholding tax certificates issued by the other party withholding agents, proof of advance payment of the tax and prior year's income tax return). Statement 5: Only the unaudited financial statements in the qualified functional currency shall be submitted to the BIR. a. Statements 1, 2, and 3 only b. Statements 3, 4, and 5 only c. Statements 1, 2, and 5 only d. Statements 1, 3 and 4 only e. All statements are incorrect 9|P

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60.

Grey Worm Company, a VAT registered entity, purchased in the beginning of CY 2014, a delivery from a VAT-registered dealer of automobiles. Due to recent flooding, the only record/document available related to the said purchase was an official receipt with an amount of P 1,145,520 (inclusive of VAT of P 123,840). How much would be the depreciation expense that can be claimed as deductible expense in CY 2014 if the equipment has useful life of 4 years? a. P 288,960 b. P 259,000 c. P 286,380 d. P 317,340

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