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FPQ1 - Answer Key

The document contains 4 problems regarding individual and corporate income tax calculations for Year 2017 (before the TRAIN Law). Problem 1 calculates the allowable deductions for an individual. Problem 2 calculates the allowable deductions for a corporation. Problem 3 calculates the taxable income for an individual who paid foreign tax. Problem 4 compares itemized and standard deductions for an individual's business income.

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Ji Yu
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71 views

FPQ1 - Answer Key

The document contains 4 problems regarding individual and corporate income tax calculations for Year 2017 (before the TRAIN Law). Problem 1 calculates the allowable deductions for an individual. Problem 2 calculates the allowable deductions for a corporation. Problem 3 calculates the taxable income for an individual who paid foreign tax. Problem 4 compares itemized and standard deductions for an individual's business income.

Uploaded by

Ji Yu
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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D LONG PROBLEMS

ND For Year 2017, Train Law is not yet applicable and if Year is not given, then Train Law is appli
D Problem 1
ND
D Salaries of Assistant
D Travelling Expense
ND Light and Water, office
ND Stationaries and Supplies
D Office Rent
D Loss on sales of Stocks
D 7000
ND Non-ded 2916.67
ND Deduc. 4083.33
D
ND Basic Exemption
F Additional Exemption
T Total Allowable Deduction for 2017 of Mr. Cha Eunwo
F
T Problem 2
T Written off Accounts Beg 20,000.00
Provisions 15,000.00
End (30,000.00) 5,000.00

Depreciation Expense End 110,000.00


Dep. Of sold Eq 30,000.00
Beg (100,000.00) 40,000.00

Loss on Fire Cost 5,000,000.00


Accum. Dep (3,000,000.00)
Book Value 2,000,000.00
Salvage Value (250,000.00)
Insurance (1,600,000.00) 150,000.00
Total Allowable Deduction for 2017 for Twice Corp. 195,000.00
(No Basic Exemption or Additional Exemption for Corporations)

Problem 3
Business Income 1,120,000.00
Allowable Deductions:
Business Expenses (390,000.00)
Net taxable Income of Hanako 730,000.00
(Tax paid to Foreign Country claimed as Tax Credit has better tax savings)

Problem 4 a. Itemized Deduction


Sales 10,000,000.00
cost of sales (4,000,000.00) 6,000,000.00
Interest Income (96000/.80) 120,000.00
Total Gross Income 6,120,000.00
Allowable Deductions:
Salary Expenses 500,000.00
Representation Expenses 200,000.00
Interest Expense paid to BIR 20,000.00
Interest Expense paid to Metrobank 60,400.00
(100, 000 -(120,000*.33))
Depreciation Expense 40,000.00
Office Rent Expense (250000*.95) 62,500.00
Group Insurance Expense 50,000.00
Bad Debt Expense 20,000.00
NOLCO 200,000.00 (1,152,900.00)
Basic Exemption (50,000.00)
Taxable Income of A for 2017 Itemized 4,917,100.00

b. Optional Standard Deduction


Sales 10,000,000.00
Interest Income 120,000.00
Gross Receipts 10,120,000.00
OSD (10120000*.40) (4,048,000.00)
Basic Exemption (50,000.00)
Taxable Income of A for 2017 OSD 6,022,000.00

Problem 5 a.
Pliferage Loss- Office Supplies 5,000.00
Casualty Loss 15,000.00
Deductible loss from Gross Income 20,000.00

b. Deductible loss from Capital Gains 0.00


hen Train Law is applicable NOTE:
INCOME OF INDIVIDUALS FOR YEARS 2017 and Below (BEFORE TRAIN LAW
Has Basic Exemption- P50, 000
96,000.00 Has Additional Exemption- P25, 000 for each qualified dependents
11,000.00 - maximum of 4 qualified dependents
7,890.00
1,960.00
57,000.00
4,083.33

50,000.00
75,000.00
302,933.33

If Tax Paid to Foreign Country is included as expense Tax Paid to Foreign Country as Tax Credit
1,120,000.00 1,120,000.00
(400,000.00) (390,000.00)
720,000.00 730,000.00

720,000.00 730,000.00
(250,000.00) (250,000.00)
470,000.00 480,000.00
x .20 x .20
94,000.00 Income Tax Due and Payable 96,000.00 Income Tax Due
(10,000.00) Tax Credit
86,000.00 Income Tax Due and Paya
94,000.00
(86,000.00)
Tax Savings 8,000.00

Net Capital Loss cannot be used by corporations


Below (BEFORE TRAIN LAW)

ualified dependents
ualified dependents

ign Country as Tax Credit


Tax Limit
146,000.00 x 96 000 19,200.00
730,000.00

Actual Tax Paid 10,000.00

Whichever is lower between the tax limit and actual tax paid

Income Tax Due


Tax Credit
Income Tax Due and Payable

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